Public Bill Committee

[Frank Cook in the Chair]

Tony Baldry: On a point of order, Mr. Cook, is it in order to ask the Minister for an explanatory memorandum on the new schedule relating to paper bags? New schedule 1 is 13 pages long and, as it is likely to be discussed in the last Committee sitting and is opaque, will the Minister provide us, between now and then, with a plain English explanatory memorandum, so that colleagues can understand what it is all about?

Frank Cook: It is in order to ask, and I am sure that the Minister has taken note of your question.

Clause 14

Duty to report on proposals and policies for meeting carbon budgets

Gregory Barker: I beg to move amendment No. 46, in clause 14, page 7, line 21, leave out ‘report setting out’ and insert
‘detailed strategy report setting out the measures,’.

Frank Cook: With this it will be convenient to discuss the following amendments: No. 47, in clause 14, page 7, line 22, at end insert
‘, and the indicative annual ranges within the net UK carbon account for each year must fall in order to meet the carbon budget for the relevant budgetary period (“the climate change strategy”).’.
No. 48, in clause 14, page 7, line 23, leave out ‘report’ and insert ‘climate change strategy’.
No. 49, in clause 14, page 7, line 28, leave out ‘report’ and insert ‘climate change strategy’.
No. 50, in clause 14, page 7, line 30, leave out ‘report’ and insert ‘climate change strategy’.
No. 51, in clause 14, page 7, line 33, leave out ‘report’ and insert ‘climate change strategy’.

Gregory Barker: Clause 14 places a duty on the Prime Minister to put together a report setting out proposals and policies for meeting the carbon budget. However, the existing proposal is not robust enough. The Prime Minister should be able to tell Parliament not only what we should be doing to meet the budgets, but, crucially, how we should do it. That is an important difference. Rather than merely producing a report, it would show far greater leadership if the Prime Minister were to set out a detailed climate change strategy on how the Government are going to meet those demanding targets.
The Prime Minister should not merely report on the progress made in the past and display a map of where we need to go. They should lead on how we will meet our targets in future. The reporting procedures in the Bill will not be complete unless they include a duty for the annual reports to contain an assessment of the effectiveness of the measures taken to reduce carbon emissions. The amendments would require that the statement laid before Parliament should include a comprehensive report on the effectiveness of the climate change strategy as well as details of any further policies or proposals that may need to be included. Government policies to reduce emissions should be assessed regularly, their successes should be reported on openly and changes should be proposed wherever progress is falling short.
I am quite up front in saying that we in the Conservative party fully intend to be the Government responsible for the report on the first budgetary period, so we should be holding ourselves to the highest standards of accountability in meeting those targets. I consider the strategy report to be like the annual finance Budget. The Chancellor proposes a tax and spending regime for a year and says that he will bring in x billion pounds in taxation and spend y billion pounds on providing services. However, it is inevitable that in the following year the Chancellor will find that growth was not exactly as predicted or that events caused a little bit more spending than proposed, so in the next Budget he will therefore make the necessary adjustments to get things back on track. If we are to bring carbon emissions under control, that is how we should deal with them.
There is precedent for placing a duty on the Government to produce such a strategy report. For example, section 2(1) of the Warm Homes and Energy Conservation Act 2000 places a duty on Ministers to
“prepare and publish...a strategy setting out the authority’s policies for ensuring...that as far as reasonably practicable persons do not live in fuel poverty.”
Section 2(5) requires Ministers to
“take such steps as are in its opinion necessary to implement the strategy.”
There is also precedent for requesting a detailed report or proposal. Schedule 5 to the Planning and Compulsory Purchase Act 2004 and schedule 89 to the Local Government and Housing Act 1989 both require the submission of detailed proposals. The requirement for a detailed report already exists in regulation 32 of the Ionising Radiation Regulations 1999.
With specific reference to amendment No. 47, as we have already discussed, it would make eminently good sense to set out indicative annual ranges in this detailed strategy report. The strategy report should be the natural and authoritative place for the Government to publish their indicative annual ranges.

Phil Woolas: I thank the hon. Member for Bexhill and Battle for laying out his amendment, which, if I have understood him correctly, would replace the words “report setting out” with
“strategy report setting out the measures”.
Further amendments would replace the word “report” with “climate change strategy”, so I am glad to see that he has adopted the language of new Labour, although I prefer plain English, especially in relation to legislation.
The hon. Gentleman has made a serious point, however, so let me respond. I shall deal with amendment No. 47 separately, as you have asked us to, Mr. Cook, but amendments Nos. 46, 48, 49, 50 and 51 would change the wording to a “climate change strategy” setting out measures, proposals and policies. The practical effect of the amendments would be negligible. The only possible problem with them is that the report will cover measures to reduce emissions only and will not cover adaptation to climate change. There might be a point to calling the report a climate change strategy, but equally it might be misleading.
The report published under clause 14 plays an important part in the greater predictability provided by the Bill’s framework. We all agree that those who are planning investments want to know not only the overall level of the UK-wide budget, but the choice of policies that will be implemented. The report will be crucial in bringing together policies and showing how they will combine to meet the carbon budgets. In that context, we cannot see what amendment No. 46 and amendments Nos. 48 to 51 would achieve. The report required under clause 14 will already have a high status, which has been further emphasised by the Chancellor’s announcement that the Government’s plans for meeting the first three carbon budgets will be set out alongside the Budget 2009.
It is not clear how calling the report a strategy or requiring it to contain measures in addition to proposals and policies will fundamentally change its nature. In addition, calling it a climate change strategy might be misleading, as the report will cover mitigation only—measures to reduce emissions. It will not cover adaptation to climate change, which will be dealt with by the Government’s adaptation programme in clause 56. Of course, I agree with the hon. Gentleman that the report will be an important document, but the amendments are unnecessary. I shall stop there, because I think that amendment No. 47 will be dealt with separately.

Frank Cook: Order. For clarification, amendment No. 47 is part of the group of amendments.

Phil Woolas: Amendment No. 47 is similar to amendment No. 54, which we have already dealt with. Amendment No. 54 would have turned the annual indicative range into a range within which the net carbon account “must” fall, and colleagues will remember that debate from this morning. Amendment No. 47 would give rise to the same problems: as before, the annual net UK carbon account for any one given year could be outside the range but the budget could still be met. Alternatively, for one year we could be within the range, but still exceed the budget as a whole. The intention behind the indicative annual range is to provide an indication of what is expected to happen within each year of the budget based on the proposals and policies. Therefore, while I welcome the intention behind the amendments, I do not believe that they are necessary.

Gregory Barker: We believe that there is more to a strategy than to a report. A report could be a very staid, brief and backward-looking document, whereas a strategy must be exactly that. I take on board what the Minister has said and note his reluctance, and I will consider the matter further. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Phil Woolas: I beg to move amendment No. 8, in clause 14, page 7, line 29, at end insert—
‘( ) The report must outline the implications of the proposals and policies as regards the crediting of carbon units to the net UK carbon account for each budgetary period covered by the report.’.
This is an important part of the package of Government amendments. It relates to the balance between action to reduce emissions in the UK, action at European Union level—by UK companies through the European Union emissions trading scheme for example—and the purchase of international carbon units. Clause 25, which was a change made in the other place, seeks to ensure the correct balance by placing a limit on the contribution that action at EU and international level can make towards our carbon budget. We will come to that clause later.
The Government do not believe that an inflexible limit is the best way to approach the issue. However, we recognise that the balance between action at UK, EU and international levels is extremely important. The Bill helps us to achieve that by providing a clear framework for action and ensuring greater clarity for industry and households about our path towards a low-carbon economy. We must send a clear signal to our international partners about our commitment in the UK to tackling climate change.
Amendment No. 8 will add to existing provisions in clause 34 by increasing transparency. Clause 34 already requires the Committee on Climate Change, as part of its advice on each of the five-year carbon budgets, to advise on the extent to which the carbon budget should be met by action within the UK and the use of carbon units. The amendment goes even further; clause 14 requires the Government to lay a report before Parliament setting out proposals and policies for meeting the carbon budget. Amendment No. 8 means that that report must also set out the implications of those proposals and policies with regard to the relative balance between action to reduce emissions within the UK and the purchase of carbon units, which hon. Members on both sides of the Committee have asked for.
For instance, the report could include information on the role of the emissions trading scheme in helping to meet our budgets or detail the Government’s broad expectations for the purchase of carbon units through EU or international trading mechanisms that may come about in the future. We want to keep the balance between action at UK, European Union and wider international levels under review, and, if necessary, we will revisit our approach ahead of each budgetary period.

Steve Webb: The Minister has said that the report will reflect what happens in the EU ETS. Businesses are the bodies that buy and sell the credits, and the Government want 100 per cent. tradability. Therefore, if a business exceeds its carbon quota and buys credits to offset that, the net effect will be nil. Given the Government’s world view, where there is no cap on the percentage that can come from overseas, the number will always be the same. In what sense will information be conveyed in the report, when we know in advance what the answer will be because the ETS cap is fixed in advance?

Phil Woolas: That is a good question. The hon. Gentleman has said that we want 100 per cent., but we do not—we want flexibility for 100 per cent. We will have this debate later, but, in practice, one has to achieve a balance between UK domestic emissions capping and what is available for offsetting overseas. I do not want him to leave this debate thinking that we want 100 per cent., as we do not. We want to get the balance right. The simple point in what I have just said, which I want to emphasise, is that we want flexibility. I believe that the hon. Gentleman agrees with me—Members of his party in the other place did.
I believe that the amendment helps to provide the clarity for which business and others have been calling. Incidentally, for maximum transparency, the report in clause 14 to which the hon. Gentleman has referred must be laid before Parliament at the same time as each budget is set, which is a point that we probed during consideration of an earlier amendment.

Gregory Barker: We have not reached the vitally important issue of using overseas carbon credits in Committee, but I have no doubt that it will be an extremely important and engaging discussion when we do. My party is strongly of the opinion that if we are to secure first-mover advantage in the new low-carbon economy, it is vital that the UK focuses its investment here in Britain, facilitating dynamic industrial change in our economy, rather than through a trading system that would involve the majority of the money going overseas. We certainly need to do that if we are to develop the skills, jobs and technologies to make Britain a truly green economy, but I shall save that debate for another sitting.
We will support Government amendment No. 8. Whatever their designs may be towards the distribution of domestic versus international carbon reductions—we all have different views on the exact distribution—it is certainly in the best interests of all concerned and of the Bill that the implications of carbon trading are examined and included in the strategy report.

Amendment agreed to.

Amendment made: No. 5, in clause 14, page 7, line 33, leave out ‘Prime Minister’ and insert ‘Secretary of State’.—[Mr. Woolas.]

Clause 14, as amended, ordered to stand part of the Bill.

Clause 15

Annual statement of UK emissions

Phil Woolas: I beg to move amendment No. 6, in clause 15, page 8, line 14, leave out ‘passenger travel and imports or exports of goods’ and insert ‘aviation or international shipping’.

Frank Cook: With this it will be convenient to discuss the following: Government amendment No. 7, in clause 30, page 15, line 36, leave out subsections (1) to (5) and insert—
‘(1) Emissions of greenhouse gases from international aviation or international shipping do not count as emissions from sources in the United Kingdom for the purposes of this Part, except as provided by regulations made by the Secretary of State.
(2) The Secretary of State may by order define what is to be regarded for this purpose as international aviation or international shipping.
Any such order is subject to affirmative resolution procedure.
(3) The Secretary of State must, before the end of the period of five years beginning with the passing of this Act—
(a) make provision by regulations as to the circumstances in which, and the extent to which, emissions from international aviation or international shipping are to be regarded for the purposes of this Part as emissions from sources in the United Kingdom, or
(b) lay before Parliament a report explaining why regulations making such provision have not been made.
(4) The expiry of the period mentioned in subsection (3) does not affect the power of the Secretary of State to make regulations under this section.
(5) Regulations under this section—
(a) may make provision only in relation to emissions of a targeted greenhouse gas;
(b) may, in particular, provide for such emissions to be regarded as emissions from sources in the United Kingdom if they relate to the transport of passengers or goods to or from the United Kingdom.’.
Amendment (a) to Government amendment No. 7, in line 13, leave out from ‘Kingdom’ to end of line 15.
Amendment (b) to Government amendment No. 7, in line 13, leave out from ‘Kingdom’ to end of line 17.
Amendment No. 81, in clause 30, page 16, line 9, leave out from ‘passed’ to end of line 11.
Amendment No. 82, in clause 30, page 16, line 11, at end insert—
‘(5A) Regulations under this section must provide for emissions arising from the transport of goods to the United Kingdom to take account of all stages of the journey of those goods to the United Kingdom from their point of origin, where any part of that journey has been by sea or through the Channel Tunnel.’.
New clause 1—Emissions from international aviation or international shipping
‘(1) Emissions of greenhouse gases from international aviation and shipping shall count as emissions from sources in the United Kingdom for the purposes of this Part from 1st January 2013, as provided by regulations under this section.
(2) The Secretary of State may by order define what is to be regarded for this purpose as international aviation or international shipping.
(3) An order made under subsection (2) is subject to affirmative resolution procedure.
(4) The Secretary of State may make provision by regulation as to the circumstances in which, and the extent to which, emissions from international aviation or international shipping are to be regarded for the purposes of this Part as emissions from sources in the United Kingdom.
(5) Such provision may be made only in relation to emissions of a targeted greenhouse gas and in making such provision the Secretary of State shall have regard to international carbon reporting practice.
(6) Regulations under this section may make provision—
(a) as to the period or periods (whether past or future) in which emissions of the targeted greenhouse gas are to be taken into account as UK emissions of that gas, and
(b) as to the manner in which such emissions are to be taken into account in determining the 1990 baseline in relation to those periods.
(7) They may, in particular—
(a) designate a different base year, or
(b) designate a number of base years, and to provide for the emissions in that year, or the average amount of emissions in those years, to be taken into account as if part of the 1990 baseline.
(8) Regulations under this section are subject to affirmative resolution procedure.’.
Amendment (a) to new clause 1, in line 14, at end insert—
‘(5A) Regulations under this section must provide for emissions arising from the transport of goods to the United Kingdom to take account of all stages of the journey of those goods to the United Kingdom from their point of origin, where any part of that journey has been by sea or through the Channel Tunnel.’.

Phil Woolas: We come to the detail of the Bill, and I suspect that there will be a robust debate.

Frank Cook: Oh.

Phil Woolas: Robust, not long, Mr. Cook. There is no reason why the debate cannot be short. The arguments have been rehearsed in the other place and during pre-legislative scrutiny. The Liberal Democrats have long campaigned for the existence of pre-legislative scrutiny. I have never seen a correlation between the amount of time spent on such scrutiny and the amount of time spent in Public Bill Committee, but I live in hope.
Government amendments Nos. 6 and 7 aim to clarify the Bill’s language, while also working, of course, within the spirit and the intent of the amendments made in the other place. They replace
“international passenger travel and imports or exports of goods”
with
“international aviation or international shipping”.
Let me explain why.
As amendment No. 82 recognises, one possible way of defining these emissions is by reference to “the transport of passengers or goods”. However, there are, of course, other ways—I argue better ways—to define those emissions, which we do not want to rule out inadvertently. That is why I want to revert to the broader language of
“international aviation or international shipping”,
which is established terminology within the United Nations and the European Union, as the right hon. Members for Suffolk, Coastal and for Penrith and The Border will, I hope, recognise.
Furthermore, the proposed clause 30(2) gives the Secretary of State the power to:
“define what is to be regarded...as international aviation or international shipping.”
This power was originally part of the Bill, but it was removed in the other place. It is a useful supplementary part of the Bill’s framework. It allows us to clarify what we are talking about when we refer to:
“international aviation or international shipping”
emissions, and to update that definition as necessary. For instance, and this is a very important point, the definition would be updated if there were—I hope and expect that there will be—an international agreement on how to allocate emissions to individual countries.
Finally, the other place set a deadline of within five years of Royal Assent for the Secretary of State either to include international aviation and shipping emissions in the UK’s targets under the Bill or to explain to Parliament why that has not been done; it was an opt-out rather than an opt-in, if I can put it that way. Given the importance of securing international agreement on those issues, we remain concerned that setting an arbitrary deadline risks being perceived negatively by our international partners. However—I look to my hon. Friend the Member for Bury, North at this point—given the strength of feeling in the other place and elsewhere on this issue, the Government are prepared to accept the duty to act within five years, either by including those emissions in our targets or by reporting to Parliament to explain why that was not possible—in other words, the opt-out rather than the opt-in.
If I may, let me briefly set out what clause 30(4) does, as amendment No. 81 would remove it. We believe that it is necessary, because it clarifies that the Secretary of State’s ability to make or amend regulations on this issue does not end once the five-year period from Royal Assent has elapsed. It ensures that the Secretary of State can still make regulations or amend regulations that have already been made.
If after, say, eight years, there was international agreement on a different way of allocating emissions between countries, which does not preclude an international agreement before that time, clause 30(4) would allow us to amend our regulations to reflect that agreement, but only after an affirmative vote in both Houses. Alternatively, if we wanted to make some minor and technical changes to our existing regulations, as is bound to happen at some point between 2013 and 2050, clause 30(4) clarifies that that is possible.
Let me also briefly set out the three key reasons why the Government feel that we cannot set a date for including those emissions. First and most importantly, we all agree that these are global issues and that a global solution would be the best way forward. Let me reassure the Committee that the United Kingdom is at the forefront of international discussions and proposals to address that point. We are also starting to see progress with both the International Civil Aviation Organisation and the International Maritime Organisation in the United Nations talks. Indeed, it was my right hon. Friend, the Secretary of State who successfully proposed at European Union level that aviation and shipping be included within the targets. If we are to succeed, we will need to persuade other countries that there is no hidden agenda and that we are not trying to force something on them now for narrow economic or political reasons. What we are trying to do is forge a global solution in the best interests of the international community as a whole, recognising that we are talking about global emissions that affect our domestic circumstances and not the other way around. That will be made much more difficult if we have a domestic deadline for deciding what the UK’s fair share is.
As hon. Members know, there are several possible ways of splitting emissions between countries. For some countries, the methods provide radically different answers. Independent analysis carried out for the Government that examined different methods found, for instance, that one of the models gave Belgium, a distinctly trading nation, more than 29 times as many emissions as under the other model. Denmark got more than five times as many, while Sweden got less than half. Such differences carry huge potential economic implications.
It is not simply a case of picking the right methodology. Suppose in 2011 or 2012 we were nearing international agreement, with the UK playing a leading role in the discussions. Then, for entirely domestic reasons, we were forced to choose a particular methodology for calculating the UK’s emissions for “international aviation and shipping”. How would that go down with our partners? Would that not give ammunition to those states—there are many—that do not want to see progress on the issue. They could say that we, the UK, were driven not by genuine desire for global agreement but by domestic concerns.
Secondly, it is not impossible that we could reach international agreement through the United Nations framework convention on climate change, the IMO or the ICAO. The best way to deal with international aviation or shipping emissions is through a sectoral approach—my personal view is that that is the most likely outcome—rather than allocating emissions to individual countries. In fact, that is one of the proposals that we are already discussing. We are already starting to see it at the European Union level, where it is likely that under the ETS aviation emissions will be allocated to airlines rather than to individual member states. Once in the EU ETS, aviation emissions will be capped, and any increase will have to be met by reductions elsewhere. Any reduction in aviation emissions would simply lead to emissions going up somewhere else, which is how emissions trading works.

Martin Horwood: What is the most optimistic assessment for when such a sectoral international agreement might be implemented?

Phil Woolas: The honest answer to that question is by December 2009. There is pressure for an agreement—remember that all countries are facing the issue, but what is important is that it is part of the UNFCCC. However, I take the hon. Gentleman’s point—the bottle-half-full approach may be seen to guarantee that we are not dependent on international agreements, but I will come to my arguments against that in a moment.

Anne McIntosh: Before the Minister leaves that point, I have a concern with that approach. If the emissions attach to the airlines, then the airlines would be penalised by passing through a European Union airport. International flights could simply bypass the European Union, which could penalise our competitiveness. That has been put to us by the CBI.

Phil Woolas: The hon. Lady is right. That is the issue with an international agreement. That is the ultimate interdependency. Just as I have argued that a global agreement is the best option, the next best option is a European Union agreement and after that national definitions, which I believe would cause all sorts of problems.
I point out that today my right hon. Friend the Secretary of State for Communities and Local Government has outlined the agreements by local authorities on their performance indicators. Many of those local authorities—across the political spectrum, I am delighted to say—have adopted the CO2 emissions target within their area. How are we to allocate them? Are we to say to Hillingdon, because it is the host to Heathrow airport, that all the emissions resulting from the economic of the airport should be assigned to Hillingdon borough council?
I shall choose a better example relating to my hon. Friend the Member for Southampton, Test. Will all the shipping in and out of Southampton be ascribed to Southampton city council? I can see arguments in favour of that, but it would be unfair to the people of Southampton. It is not a trite point; it is an important one. We all want an international agreement, but it is a question of how one defines where the emissions should be allocated. The Government are not trying to duck that. The essence of our policy is that all emissions should be based on science, and I cannot argue for carbon markets or for a cap-and-trade system unless I argue for science. It is a matter of how we allocate.
There is no guarantee that it is possible to calculate what is a UK emission, or the emissions of any other individual countries. Surely what matters is what action is taken to tackle the contribution that the aviation and shipping sectors make to climate change. It does not matter to me whether that action is taken at national, European or international level. Of course, we have a leadership role, which the Government’s proposals recognise, but working towards that agreement should be our priority. We must recognise that what we agree internationally could be completely incompatible with national emissions targets, so we should not prejudge that issue now.
I conclude my remarks by saying that, as was recognised in the other place, these issues are very complex, but more importantly, they are very significant. We have already said that with respect to international aviation emissions, we expect to take a decision on whether to include those emissions in our targets well before 2013. We have already asked the Committee on Climate Change to look at that as part of its first task.
There are significant practical questions. That is why, for instance, the Committee’s work plan, which is available publicly on the Department for the Environment, Food and Rural Affairs website, states:
“One possible answer is that it may be much easier if attempted at EU rather than national level.”
For instance, what is the UK share of emissions? How would that work alongside aviation’s current inclusion in the EU ETS? Would one have two systems running alongside each other, and if so, how would that work?
Shipping is an even more complex question. Neither I nor the Government are trying to duck the issues. Ships can go for many months without refuelling, and they can also take on fuel from tankers in international waters. Based on fuel sold within the UK, shipping emissions have declined over the past 10 years. By any other measure, however, shipping in and out of the UK has increased over that period, so how does one account for that?
Finally, especially if we are acting alone, what of the risk of perverse impacts, which hon. Members often point out when they scrutinise Bills? What of the problems such as planes and ships filling up elsewhere and arriving with a heavier fuel load, or of air traffic simply diverting from Heathrow to Amsterdam or Paris, or of ships docking at Rotterdam and their cargo being driven here by truck? All those scenarios could increase emissions rather than reduce them.
I look forward to the debate on these points, but I ask the Committee to accept the good intent and practical implementation policies behind the Government amendments.

John Gummer: I want to share with the Minister something that, as a representative of Felixstowe, which is now Britain’s largest port, I am worried about. I am concerned not only about the emissions per tonne of diesel, but the quality of the diesel that is used. We, in the European Union, have been slow in saying that ships that use filthy diesel are not allowed to dock. I am not talking about whether they take that on board, but just that they should not be allowed to dock. We need to reduce the direct air pollution effect of ships, which is very strong—as anyone with a coastal constituency in this country knows. I am not criticising the Minister, but it is interesting that he should have given all the different examples, but did not refer to that. Such action would have a dual effect. It is something that we could do, and it is a matter that the Government could lead on in the European Union. Proportionately, Britain is more affected by the filth from dirty ships than any other country in Europe. Can we not take that on board?

Phil Woolas: I am grateful to the right hon. Gentleman. With your indulgence, Mr. Cook, I wish to make another point. We are also a world leader in engine design and manufacture. The most efficient ship engines in the world are our military ship engines. For reasons not primarily to do with emissions, but with refuelling Type 55 frigates, I highlight Rolls-Royce. I mention that because part of the supply chain is in Oldham, East and Saddleworth. I shall stop there, hoping that the Oldham Evening Chronicle correspondent has noted that important remark.
The right hon. Gentleman is correct. I am trying to ensure that we have a verifiable emissions capping regime and recognise its global nature, that we give UK plc competitive advantage, when we can, and that we do not unduly punish the UK. I think that I am right that 30 per cent. by volume in his example of trade between the UK and the European Union comes through Felixstowe dock, which is significant. I used the Heathrow and Southampton examples but, given that my hon. Friend the Member for Southampton, Test is about to intervene, I suspect that Southampton is bigger than Felixstowe in volume trade.

Alan Whitehead: I regret to say that Southampton is not bigger in volume trade than Felixstowe, but obviously the quality of trade is better.
The right hon. Member for Suffolk, Coastal has cited the example of dirty diesel. There are also other factors relating to what shipping carries, how efficiently it carries it, and over what distance. Given that 95 per cent. of what we consume comes into this country via ports, notably Southampton and Felixstowe, we are concerned about what is coming in and going out on ships, too. What is the value per mile travelled, for example?
Do the ships, when in port, give back the electricity that they are consuming when they lie idle? Can they be plugged into the port when they are in dock? If that were part of the package, Southampton would make an interesting net contribution, as would Felixstowe, from the power source of ships lying in port. Will my hon. Friend be considering those matters when examining the contribution made by shipping in respect of CO2 measures?

Phil Woolas: My hon. Friend’s intervention illustrates the complexity of the matter. The Government are not trying to dump the issue. We have argued—above all countries in the European Union—that, of course, aviation and shipping emissions should be included in a scheme. Given the importance that we place on the cap-and-trade system and carbon trading, it would be nonsense for us not to do so. That does not disguise the fact that there are the complexities to which my hon. Friend has referred.
Let me mention some further items to consider. Should we look at emissions from the transportation of goods to the UK at all stages of the journey? Ships that dock in Southampton may well be carrying goods, including passengers, from one country to another—they may be dropping off at Southampton, taking on new cargo and moving on elsewhere.
I suspect that the whole Committee is trying to include aviation and shipping in a pragmatic way, so let me point a way forward. There are already international rules on how to calculate the emissions from, for example, journeys through the channel tunnel. If the electricity is generated on the French side, the emissions belong to France; if the electricity is generated on the UK side, they are our emissions. I am trying not to score a point, but to show the difficulties. The alternative approach, which we will discuss later, risks double counting. We also have the problem of the administrative burden. How do we ascribe goods where part of the journey was by sea? Would we need to examine every single journey of every single ship and aircraft? Huge uncertainties and data problems need to be considered.
The Government’s approach meets the objective of those who are rightly campaigning for the inclusion of aviation and shipping emissions in the Bill and the international agreement. Let us move forward on the best basis.

Anne McIntosh: I am more confused now that the Minister has moved the amendment than I was before. In his amendment, is he saying that the Government could introduce regulations that apply to aviation and shipping and remove the other aspects of international transport? He referred briefly to trucks, which surely provides an opportunity for us to charge, for example, the Dutch and German hauliers who come in with full tanks of more polluting diesel that is cheaper than in the rest of Europe. Currently, they can undercut domestic hauliers, who cannot compete with their prices, on cabotage. I am slightly concerned that by including aviation and shipping, but putting it out to the long grass—longer than five years—he is also excluding railway and road transport. Is that the purpose of his amendment?

Phil Woolas: Certainly not. I accept the hon. Lady’s point, but the framework that we have put forward is the best one from the UK plc point of view, and that it also achieves our objectives. Government amendments Nos. 6 and 7 work within the spirit of the changes to the Bill made in the other place. As I hope the hon. Lady recognises, we have considered that matter, which is backed up by statements from my noble Friend Lord Rooker. Those changes set a deadline of five years from Royal Assent to either include those emissions or to report to Parliament on why it has not been done. I am trying to say, “Okay. You’ve got a point. We need to include them and give surety to industry and the public that they are included, but can we have five years to reach an international agreement?” If we do not do that, we will have to explain why that is the case to Parliament and decide where to go from there. That is my proposition and I hope that the Committee will accept amendments Nos. 6 and 7.

Frank Cook: Order. I need to clarify something. I am anxious to preserve the tolerant, friendly, brotherly, and almost comradely exchanges that are taking place, which I do not want to impinge on adversely, but I must draw a distinction between interventions and speeches. Some interventions have been very long, and speeches have then taken up and made the same points that were made during the interventions. Will hon. Members try to analyse their interventions and speeches.

Gregory Barker: I hear what you say, Mr. Cook, and will do my best to comply.
It is vital that aviation and shipping in the broadest sense are included in this Bill. Despite the surfeit of amendments, and amendments to amendments, it is important to note—I am grateful for what the Minister has said—that a great deal more unites the parties in Committee than divides us, although there are differences of opinion nevertheless. We all agree on the necessity of including carbon pollution caused by aviation and shipping in our national carbon budgets. We all agree that that is, unfortunately, a process far easier said than done, which is why we have reluctantly agreed on the necessity of a four to five-year delay before including aviation and shipping properly in the carbon budget.
We have also come to the conclusion that it is right to agree with the Government that they should be able to define exactly what constitutes emissions from aviation and shipping and to say under what circumstances those emissions should be counted as arising from the UK—the Minister explained that point very well in his speech. However, due to the seriousness of the issue, which goes to the heart of the Bill, I want to reiterate for the record the scope of the problem.
Aviation is the fastest growing source of greenhouse gas emissions in the United Kingdom and many advanced economies throughout the world. In the unlikely event that the UK’s 2050 target remains at just 60 per cent., current forecasts project that emissions from aviation will be equivalent to 26 per cent. of the total UK carbon allowance. That is why people are right to be alarmed at the role of aviation, not because of what it is emitting now, but because of its potential to dominate the carbon economy landscape by 2050. If we end up going for an 80 per cent. reduction target under current growth rates, aviation could account for more than 50 per cent. of the UK’s total annual carbon budget by 2050. To say that that would put extreme pressure on other sectors of our economy to meet our budget targets would be a massive understatement, even before we begin to consider the additional impact of the multiplier effect of releasing heat-trapping gases at high altitudes.
In its 1999 report, “Aviation and the Global Atmosphere”, the intergovernmental panel on climate change put the multiplier effect at two to four times the actual emission because of the effect of being emitted at high altitude. If that is taken into account, aviation emissions account for well over the total of the UK’s allowance by 2050, assuming a reduction target of 80 per cent. That paints a dramatic and horrifying picture, but it shows the key role that solving the problem would have in achieving a reduction in our national carbon emissions. I believe that we can ultimately solve the problem.
As the Minister has said, emissions from shipping are trickier for two main reasons. First, shipping emissions are far more difficult to calculate, primarily because aeroplanes, by and large, carry fuel for only one trip at a time to keep their weight to a minimum, but ships are not constrained in that way and often refuel every few weeks. Furthermore, ships can refuel in many parts of the world, few of which have a proper carbon accounting mechanism. The second reason why shipping is more problematic to calculate is that while it is still a significant polluter, it is by far the most carbon-efficient method of international freight transport. The comparative figures that I have seen show that sea freight emits between 30 to 90 g of CO2 per tonne of freight per kilometre. Road freight, on the other hand, emits between 130 to 190 g per tonne per kilometre.
While shipping must internalise its carbon pollution costs, we must ensure that we do not, through well meaning but poorly designed legislation with unintended consequences, offer a perverse incentive to more carbon-intensive modes of transport, such as road freight, over the more efficient movement of goods by sea. For example, if shipping becomes heavily regulated inappropriately, there might be an incentive to have ships dock at Rotterdam or, worse, Istanbul, and then drive across the continent and into this country via the channel tunnel. That was the reasoning behind the Conservative amendments in the other place that changed aviation and shipping to the broader term, “international trade and transport”. We want further to enhance the existing clause through the addition of amendment No. 82, which would require the assessment of emissions to take into account all stages of the goods’ journey to the UK from their point of origin.
By maintaining trade and transport as it is, and by adding amendment No. 82, we wish to prevent the system of measurement being skewed in favour of more carbon-intensive methods of transport, which could happen if shipping and aviation were included without reference to other modes of transportation. Let me give some practical examples. If oranges exported from Spain to the UK were sent over on lorries, only the short leg of the journey by ferry would be included in the UK’s carbon allowance. If they were sent by sea, the whole journey would be counted, making the carbon cost much more expensive. We would therefore create a significant incentive for the use of road freight over sea freight, despite its being many times more carbon intensive. If national emissions trading schemes exist in the transit states, then the disincentive to use road freight should be strong enough.

Alan Whitehead: Has the hon. Gentleman taken into account the fact that even when goods arrive in the UK by sea, there may be a number of circumstances in which that freight is then subject to short sea shipping—one has to say that very carefully—around the UK? That means that a number of other ports are used for the ultimate destination of something that has already arrived in the UK. Therefore, additional measures relating to shipping within the UK have to be taken into account.

Gregory Barker: I have taken that into account in the amendments, but the hon. Gentleman has made a sensible point. Obviously, if national emissions trading schemes are in existence through the transit states, there would be a disincentive to use freight transport. Effectively, what we are saying is why take that risk and not give clarity when we can close that loophole here and now. If we introduced our system before some or all of our neighbouring European transit states, Britain would be perversely incentivising the movement of goods away from direct shipping and towards a more polluting alternative. Clearly, if we were leading by example, we would not want that perverse impact.
Similarly, if one imports goods from China, the best way, both in terms of cost and the environment, is for the container to be shipped directly to the UK. Yet, if we specifically mention aviation and shipping in the Bill without reference to other means of importing goods, it could make economic sense to ship only as far as Rotterdam and then move the goods by lorry into the UK to minimise the amount of carbon officially being counted. The Conservative party believes that it is correct to stick to the current wording of “international trade and transport”, because it takes in more than aviation and shipping. We are not against aviation and shipping—completely the reverse—but the term should be stretched more broadly. We would prefer our amendment No. 82 to be included, rather than returning to the previous definition of aviation and shipping.
The opt-out in clause 30 should be removed. Although it requires a report from the Government about why they were incapable of preparing the requisite regulations within five years, which would provide an incentive for them to avoid embarrassment, the fact that the alternative to having to find a solution exists at all gives the whole process a degree of uncertainty that should not be present.
My party has said all along that the Bill must give business and the market long-term certainty and clarity. Maintaining the uncertainty about whether trade and transport emissions would be included in five years’ time does not give that clear market signal that the private sector needs and deserves. That is why we have tabled amendment (b) to the Minister’s amendment No. 7. Moreover, I am happy to speak in support of the proposed change in the reporting deadline, as included in new clause 1. It makes good sense to have the new regulations laid out before setting the second five-year budget period, because, depending on the pace towards Royal Assent, if we are to stick to the existing five-year reporting period, the necessary clarity of trade and transport may not be set until 10 months into the second budgeting period. In the interests of common sense and market clarity, resetting the deadline to 1 January 2013 is a wise decision that would be welcomed by the private sector.

Martin Horwood: I suppose that I should start by welcoming the progress that has been made. The Government seem to have been taxiing up the runway, but some of the Minister’s remarks suggest that the plane may be stalling before take-off. As well as welcoming the need for the inclusion of aviation and shipping, which we welcome, too, the Minister seemed to be creating a long list of possible excuses and reasons why this is a complex area with various technical stages. Of course, it is complex; nobody is arguing that it is not. Almost all calculations of emissions are complex and there are complexities to be overcome. However, that is what the Government, the National Audit Office and many others are struggling with in terms of finding accurate reporting mechanisms. These are obstacles to be overcome, not excuses not to be prepared.
As the hon. Member for Bexhill and Battle has said, the reasons are clear. Aviation and shipping are important according to the Government’s own figures from 2006. The fuel sold to the aviation and shipping industries produced 42.8 million tonnes of carbon, representing 7.6 per cent. of the UK’s total emissions. Although the hon. Member for Bexhill and Battle has rightly pointed out that, in the long term, if those emissions are rising and all others are stabilising, reducing or being reduced through energy efficiency, the proportion of the whole will be even greater—possibly in excess of 20 per cent.—and even removing 7.6 per cent. of the UK’s current emissions would start to undermine the long-term carbon budgeting process.
That point has been strongly reinforced by a number of Select Committees. For example, the Environmental Audit Committee, on which I am honoured to sit, concluded that,
“While the draft Bill contains provisions that allow these emissions to be included in the future, we recommend that they be included immediately...There already is an internationally agreed methodology for attributing and recording these emissions as memo items to national Kyoto accounts; the Government should simply use this to track these emissions within the UK's carbon budgets.”
I should be grateful if the Minister, in his closing remarks, were to respond to the EAC’s draft report, which made that point. A similar point was made by the Select Committee on Environment, Food and Rural Affairs, which stated:
“these emissions are already reported to the UN as a ‘memo item’...The inclusion of the UK’s share of emissions from international aviation and shipping will have significant implications for the validity of the 2050 target.”
Generally, the rationale for amendments Nos. 6 and 7 was that they were about technical tidying up and rewording where necessary, which we are used to in Government amendments. Most of that looks reasonably innocuous, but I am beginning to be persuaded by the argument advanced by the hon. Member for Bexhill and Battle on terminology. Moving from
“passenger travel and imports or exports of goods”
to specific references to “aviation or international shipping” highlights the precise problem that the Minister has mentioned. Such an approach might exclude road freight and therefore lead to perverse results whereby goods that might have come in by air are transferred by an even less carbon-efficient form of transport—road freight. Perhaps our noble Friends knew what they were doing when they came up with the phraseology in the current text. If the Bill goes back to them, they might want to look at it again.
In Government amendment No. 7, we see the mysterious subsection (3)(b), which I shall describe as the parachute clause because it would enable the Government to get out of the five-year obligation altogether by laying before Parliament
“a report explaining why regulations making such provision have not been made.”
That means not bringing the matter to a vote in Parliament, or amending legislation, but simply laying a report explaining why they have failed to do that. That is not acceptable.
There are clear reasons why aviation and shipping have to be in at the earliest opportunity. Various arguments to the contrary have been put forward, such as that international agreements are ongoing and that we are developing ways of measuring these things at an international level, but that has not stopped the Government from pioneering other well-regarded legislation or policies on climate change. The emissions trading scheme was a UK initiative before it was part of a wider international scheme, and only this week the Government made an announcement on the definition of “carbon capture ready” in terms of new power stations. That is being worked on at the EU level, but we hear that the Government have come up with a definition in advance. It is quite possible for UK Governments to be pioneering in that respect and to lead rather than follow.
Clearly, new clause 1—I shall be interested to hear what the hon. Member for Bury, North says about that measure in the context of the Government’s amendments—would effectively achieve the same thing as the amendments to Government amendment No. 7, so I am inclined to be sympathetic on that.
The Minister has set out some strange arguments against the non-Government amendments. He has said that our forging ahead would somehow give other countries the impression that we were trying not to forge an international agreement, but to force something on those countries. Of course we are trying to forge an international agreement—no one doubts that in the slightest—but we are also trying to step up the pace and lead by example. I cannot see how the construction of a truly comprehensive budget for the UK would in any way undermine the development of international negotiations or agreements. If, as the Minister said in response to my intervention, a truly comprehensive sectoral agreement on aviation and shipping was in place by 2009, which is what he has said he hopes for, I would be completely astonished, but very pleased. However, even if that were the case, it would simply be another factor to take into account when setting our carbon budget.
Timing is quite important, because if we do not bring aviation and shipping in at the earliest stage, let alone if we allow that move to be delayed for longer than five years, the industries that have to be included in the carbon budget will be not be on a level playing field. They will have to make adjustments to their business plans and practices and take account of a new decarbonising economy, while airlines and others will not have to make those adjustments. Those in industries that are subject to quite rigorous international competition, such as the aluminium industry, might justifiably feel aggrieved that one of the most dangerous emitters of all was getting away relatively scot-free.

Michael Weir: Is the hon. Gentleman aware that industries such as the aluminium industry are already seeking exemptions from the European scheme at the next stage of the EU ETS discussions? Indeed, there has been talk of the German automobile industry looking for such exemptions. If aviation and shipping are not included, will not that send the wrong message and have an effect when we come to discuss the details of that scheme?

Martin Horwood: The hon. Gentleman makes an extremely valuable point—that is exactly right. If we send out a signal that it is possible to opt out or to include oneself in the small percentage of industries that will not have to make fundamental changes, we will undermine the UK’s progress towards a decarbonising, low or even zero-carbon economy. In the meantime, of course, it would make a difference to the other sectors covered by budget. Whether aviation and shipping are included makes a difference to the emissions budgeted for in housing, energy generation and so on. If those emissions are included, and there is an international agreement on the methodology by 2009, all well and good, but that will alter the carbon and energy reductions that have to be delivered in housing under the UK budget. It is vital, therefore, that we have a truly comprehensive carbon budget, which is what our amendments are designed to achieve.
Let us imagine the nightmare scenario in which, in five years’ time, the Government have failed to work out how that is to be done, despite all the expertise at their disposal and the fact that they are calculating those emissions already as a memo item for the Kyoto protocol, as pointed out by Select Committees. What will the situation be? Under the Government amendments, the Secretary of State could simply slide a quiet report before Parliament—just before a recess probably—and get away with a few negative media stories, and that would be it! In such a nightmare scenario, we would want the Government to be held fully to account and to amend legislation in the full glare of parliamentary scrutiny and publicity, because they would have let down their overall carbon reduction plan.

David Chaytor: The Minister and others have set out the context of the serious issues underlying the inclusion of aviation and shipping extremely well. I shall speak briefly, therefore, to new clause 1, and comment also on Government amendment No. 7. Although the arguments have been well rehearsed over the past 12 months, I think that we have moved on considerably from the initial debate on the draft Bill last year, and it is heartening to see such an overwhelming consensus on the inclusion of aviation and shipping.
It is worth stressing the urgency of that inclusion, given the likely increase in aviation and shipping emissions in years to come. The hon. Member for Bexhill and Battle spelled out the figures for aviation and shipping. My understanding is that, as of 2006, they officially represent 7.6 per cent. of our total emissions. Aviation, in particular, is one of the very few areas of the economy where emissions are growing, and growing rapidly. Of course, the official figures understate the reality for two reasons. The calculation for shipping, which is based on fuel purchased in the UK, is an underestimate because ships will tend largely to refuel overseas where fuel is cheaper. Secondly, on aviation, we do not take into account the impact of radiative forcing, which could multiply emissions by anything up to a factor of four.
There is no disputing, however, that the measures before us are very complex, and I still struggle to get my head around many of the measurements, the different formulae that could be adopted and the different impacts that that could have on the UK. I also struggle to understand precisely the way in which the ETS and our climate change legislation will work. However, in a sense, that does not matter, because just as there is consensus on the need to include aviation and shipping, there is consensus on the complexity and a willingness to cut through it.
The value of new clause 1 lies not only in the fact that it is quite explicit about including aviation and shipping, but in the fact that it sets a start date—1 January 2013—in advance of the second carbon budget period, whereas Government amendment No. 7 and the Government’s current commitment do not allow for that. The earliest date on which they would consider the inclusion of aviation and shipping would be after the start of the next carbon budget period. There is, of course, a way around that, as there was a way around the previous contentious issue concerning the choice between 60 per cent. and 80 per cent., which is to adjust the date. However, we will come on to that a little later.
The other advantage of new clause 1 is that it would do away with the provision for the Government to provide a report if they are unable to meet the five-year deadline. The Minister described that as an opt-out; whether it is an opt-out or a cop-out I would not wish to say. There is a growing consensus that that is not the ideal way forward. There is an analogy to be made with the earlier debate about the 60 per cent. or 80 per cent. choice. The Government’s argument is that we cannot push the issue too fast because of the complex interrelationship with international negotiations, and that pushing it too fast would cause problems. We did not make that argument when publishing the Bill in the first place, although the Bill is moving forward the international debate significantly, and nor did we make that argument in recognising that there needed to be a target for 2010 and 2050. If we accept the argument that it is absolutely legitimate for the United Kingdom to be the first country in the world to publish such a Bill, and that that actually advances the cause of international agreement by setting tough targets for 2020 and 2050, it is logical that the argument for including aviation and shipping by a set date, preferably in advance of a second carbon budget period, is perfectly valid and convincing.
In drawing to a close—I do not want to delay the Committee—we know that the figures are there because the Government collect the figures for aviation and shipping. First, will my hon. Friend the Minister tell us why those figures cannot be published alongside the first carbon budget: not only the figures for bunker fuels purchased in the aviation and shipping sectors, but figures showing how they relate to the calculation of emissions? What is the argument against doing that? I think that it would generally help the debate along. Secondly, will he comment on the fact that the date that he is proposing—five years from Royal Assent—will almost inevitably be after the start of the second carbon budget period? Could he not consider an alternative before Report?
Thirdly, we understand that it may not be possible to introduce the change by 1 January 2013—there may be overwhelming arguments against and there may be a total failure to move the international agreement process forward. Does he accept, however, that rather than have the opt-out of the Government simply producing a report to say why they had not met the deadline, if we fixed the date in the Bill now, there would still be the possibility of amending it to reflect the stalling of international negotiations in the parliamentary Session of 2012-13?

Michael Weir: I agree with much of what has been said by the hon. Members for Cheltenham and for Bury, North and I will support the new clause if it is pressed to a Division. Much has been made in Committee about the 60 per cent. target and the views of the Royal Commission for Environmental Pollution, which is the argument for why the target should be included in the Bill. It is worth remembering, however, that that target assumed the inclusion of both aviation and shipping, and that if they are not to be included, the target should be higher. It is the question of the target that really concerns me.
The inclusion of aviation and shipping is, of course, contentious. We are told that the proportion of emissions is relatively small at 7.6 per cent, but it is rising rapidly and, as has already been said, no account is taken of the fact that aircraft release emissions at high altitude. I draw hon. Members’ attention to the Government’s final impact assessment, which states at paragraph 3.2.41:
“Emissions of greenhouse gases from international aviation and shipping represent an increasing proportion of total global greenhouse gas emissions. Emissions from aviation in particular are increasing at a faster rate than emissions from other sectors.”
The point that concerns me, however, is the passage in paragraph 3.2.42 that states:
“If these emissions were to be included, the Government may wish to revisit the level of the targets to ensure they remain both ambitious and achievable, balancing the need to reduce emissions with the need to avoid excessive economic or social cost, and consistent with international progress.”
I would not necessarily argue with that, but it brings me back to a point that I made when speaking to several other clauses: we are in danger of constantly revising the target, whether it be 60 per cent. or 80 per cent. On the basis of that statement, if the Government get more information and decide to include aviation and shipping, they may alter the target.
As I have made clear, my concern is that we are setting a target that is supposed to be for 2050, which is a long way away. It will be the guiding light to where we need to go. I have referred to the need to vary carbon budgets within that period—that is perfectly sensible—but I am concerned that in several places in the Bill there is provision for the long-term target to be altered. We have it again in this clause.
It would seem much more sensible to set a target now that includes aviation and shipping, and that will not need to be altered in the future. If we start to alter the target, we risk alienating the public, who will become cynical if politicians continually change it. The public will think that they are changing it to suit their own ends rather than as a serious attempt to tackle climate change.
I appreciate what the Minister says about the complexities of including aviation and shipping. There is the further complexity of where the ships come from and where they are flagged, which may be another consideration. I do not think that there is any chance in the near future of reaching an international agreement that would be much more preferable. Rather than the UK being seen as pressing ahead and trying to impose something on the international community, I suggest that including aviation and shipping would, in fact, show leadership in pushing forward the issue.
There is a real chance of drift. In four or five years, the Government, whoever they may be, might come back and say, “We cannot quite manage it,” and the target will drift for another few years. It could take a long time for things to come to any sort of fruition, and, again, there is the danger of the overall target being reduced.
I would argue most strongly that we need to deal with the matter quickly and to include aviation and shipping in the target that we set. The hon. Member for Bury, North suggested that we have a report from the Climate Change Committee before Third Reading. I suggest that it be asked to consider this point.
I notice that in the briefs prepared for this Committee, and even in the Government’s final impact assessment, that there are various suggestions on how to calculate the target. I was struck by the fact that the assessment quoted a Department for Transport report that identified the need to increase the 60 per cent. target by 4 per cent. on the assumption that aviation was included in the European Union emission trading scheme. That should be taken into account and, at the very least, added to the initial target.
I echo the point made by the hon. Member for Cheltenham that industry needs a level playing field. Many industries will find it hard to meet the reduction targets that we will ask them to meet. I shall not repeat what I said about the ETS in an intervention, but there is a real danger of slippage if we allow one or two industries not to be included in the long-term, overall target that is an important part of the Bill.

John Gummer: I shall be brief. First, I declare an interest. My business helps a company that is bringing forward the latest advances in modern ships to operate in an effective and environmental way.
May I suggest that there is a good reason, which has not so far been mentioned, for the content of the new clause? For precisely the reasons that the Minister gave, it would be of huge help if the Government sought to find what would be the best way for them out of the problems that this complex matter creates. In other words, part of the reason why we find it so difficult to get an agreement is because everybody uses precisely the arguments that the Minister used. I use them myself. They are good arguments because they are true—it is not that we are inventing things. This is a complicated matter.
There would thus be a huge advantage if the British set an example by saying what they would do along those lines. Far from embarrassing our colleagues, that would begin to make people able to discuss the real issue, which is not whether, but how. Unless there is a “how” on the table, we shall go on discussing the matter vaguely and saying, “Oh yes, of course we should do this, but it is very difficult.” If we at least create a matrix that gives some basis for discussion about such issues, we will have moved on significantly, and rather than making the problem more difficult, we will have made it easier.
I agree with the amendment, because it puts the Government in the right position and sets an example. If the Minister finds it impossible to accept the amendment and, for reasons that I cannot imagine, the hon. Member for Bury, North does not press the new clause to a Division—that has occasionally happened before, so I must take it into account—it would help the Committee hugely if the Minister committed himself to that preparation and said that even if the Government did not bring it forward, they would bring the facts forward, show the ways in which such a thing might be done, illustrate and present it publicly, and start now so that when they get to the date on which they are forced to do something, at least Britain will have gone down all the alleyways and byways and shown what might be done to bring that together. That would bring us significantly forward from where we are at the moment.
Secondly, I hope that the Minister might be prepared to say that it is important for us to stop treating aviation and shipping as if they were two industries that have a God-given right to be treated separately. The hon. Member for Angus has done the Committee a valuable service by making that key point. I am tired of the aviation industry suggesting that it must somehow be treated separately because the public will not accept the same treatment for aviation as they accept elsewhere. That is not on. We must treat everything from the point of view of climate change and what makes a difference. If aviation is, as it seems, not only increasing but particularly damaging, I am afraid that it must be treated alongside the rest of industry. If, after deciding that, the Government conclude that for a temporary period particular arrangements must pertain, at least they would do so within a proper comparable context. If they never get to the point of considering that, those industries are left out and begin to believe that they will go on being able to defend their being left out.
Thirdly, and briefly, there is a huge amount of movement in the shipping industry. Some of the best shippers want to make the best of a very good case and are thinking seriously about better engines, better fuel, and setting higher standards. The Government could encourage that by showing that they were serious about rewarding people, which is what will happen if shipping is brought within the system. That would help a great deal, and I hope that it would, importantly, enable us to bring forward something else, which I shall set out.
I have always been suspicious about the measurement of steaming time. I know that in Southampton and elsewhere many shipowners talk about the cost of carrying goods further round the coast. It is always cheaper to unload them and carry them by road. If we concentrate on carbon emissions, reduce them and start to charge for them properly, we may find that the old figures change and that it may be more sensible to have two stops because of the reality of the impact of the carbon emissions of sea-going craft. I do not know that, but until the Government do the work, none of us will know.
I commend the new clause to the Committee. I would love it to be put to the Committee because, were it to be pressed by those who proposed it, it would be accepted. If it is not pressed, it will not be accepted, and I hope that, as a secondary course, the Government might be prepared to go down the route that I have suggested.

Phil Woolas: This has been an important debate. I pick up a strong feeling from the Committee that backs up a strong feeling from the other place and, I suspect, the Second Reading debate, about the desirability of including aviation and shipping within the emissions.

Joan Walley: I remind my hon. Friend that there was a very strong recommendation from the Environmental Audit Committee on this subject. I hope that he will take that into account.

Phil Woolas: My hon. Friend is a member of that Committee and she is right to remind me about it. Let me bring us more down to earth. We are debating how we can account for aviation and shipping emissions and I will run through the answers to the questions.
First, I will clarify the point made about reporting emissions under UN guidance. The UK, along with all other signatories to the UNFCCC, is required to report on emissions from sales of aviation and shipping bunker fuels—crudely put, that means fuels that are sold or purchased in the UK. On a global level, it does not matter where the fuels are sold. We get a figure of what the global emissions are and that is what matters. Suffice to say, the data are not completely robust. I point no fingers at any particular country, but hon. Members will understand what I mean.
The UNFCCC permits a range of methodologies for calculating those sales on a sliding scale of provision. However, that method of allocating emissions is not totally reliable, as planes and ships routinely tanker fuel from countries with lower fuel prices. That is particularly a problem with respect to shipping. Ships on international routes have a significant degree of choice about where they take on fuel. They will generally do so where the fuel can be obtained for the best price, and that includes tankers that are moored in international waters. Therefore, any attempt to calculate the UK’s shipping emissions on the basis of UK bunker fuel sales will significantly underestimate our contribution and overestimate that of other countries. My point is that I am trying to capture more than I would have to if I took the purest stance.
Similarly, with aviation, it is not apparent how such measures would work alongside the already inclusive nature of aviation in the European Union ETS. It is not clear how two systems could be operated alongside each other, with one system allocating emissions to countries on the basis of fuel sold, and the other allocating emissions and carbon units to airlines on the basis of which country they were based in. There are obvious risks of double counting or a system that is over-complex and burdensome. That is why, when the European Union ETS rules are finalised, we will ask the Committee on Climate Change for its advice on methodology.
The first question asked by my hon. Friend the Member for Bury, North was about why we cannot publish the figures for aviation and shipping emissions alongside the carbon budgets. He makes a good point. We already report those figures to Parliament, and they are published each year, as is required under the Kyoto agreement.
A number of questions were asked by the hon. Member for Bexhill and Battle, who made the valid point that industry needs certainty that emissions will be included within five years. I agree with his premise, but I say that committing now to including emissions as suggested would not provide certainty, but quite the reverse. There would be no certainty about how we would define the UK’s share of emissions or what the implications would be. There would be no certainty about the effect on aviation. Let me repeat that the Bill is not about measures to address emissions, but how we account for them.

Martin Horwood: I am puzzled by the Minister’s remarks. As both Select Committees pointed out, there is already a methodology for accounting for international emissions from aviation and shipping. Both Select Committees suggested simply taking the total and using it as the interim measure. The National Audit Office also has a methodology for calculating exact emissions from aircraft on the domestic front that is based on the nature of the aircraft and the pattern of the flight, rather than on trying to work out where every ounce of fuel came from. Is not the Minister making a bit of a meal of it?

Phil Woolas: I am not making a meal of it. I am simply pointing out that of course there are methodologies.

Martin Horwood: You are using them already.

Phil Woolas: Yes, but the hon. Gentleman must accept that in the fight to cap global emissions, one has to have a global agreement. Entering into a methodology now would have significant impact on our carbon budgeting, and UK decisions in policy would not be part of an international agreement. We could end up not only cutting off our nose to spite our face, but—if I can extend the metaphor—cutting off the nose of global emissions, to spite that. That is my simple point. I am not trying to wriggle out of this. The hon. Gentleman made that point on Second Reading, from both a standing and a sedentary position. With respect, the UN simply provides a method, not an agreed method. That method is hotly contested by countries around the world.
Martin Horwoodrose—

Phil Woolas: I shall give way to the hon. Gentleman, because he wishes to push that important point.

Martin Horwood: The last time that I looked, the Kyoto protocol was an international agreement. Will the Minister tell the Committee whether the methodology that we used to calculate our memo item on Kyoto is significantly different from that of any other country?

Phil Woolas: The hon. Gentleman’s point is right. How we report our emissions is agreed under Kyoto. That goes back to the point that, from a global perspective, if we measure bunker fuel sales, we get a global total. That does not amount to an agreement between countries that their share of the emissions calculation should be based on bunker fuels. That, in my view, is naïve. If one goes to Rotterdam, where approximately 30 per cent. of shipping fuels are sold, of course the Dutch Government are prepared to report that, as a report under the UNFCCC agreement. Were there a request to take on the cap consequential on that in the European Union trading system, the Dutch—who, I would argue, along with the UK, are possibly the most environmentally progressive country in the world—would not agree to that.
The hon. Gentleman is right to say that the reporting method is agreed, but I make the simple point that that is not the same as the allocation between countries being agreed. He is going to push his policy anyway, and I respect him for that, but I want him to accept that point. It is analogous to asking Southampton, Felixstowe or Hillingdon to take on board, within local authority caps, the total emissions generated from trade through Southampton, Felixstowe—I will throw in Liverpool and Merseyside, for the benefit of the Liverpool Echo—or Hillingdon. I hope that hon. Members see my point.

David Chaytor: Just for the sake of clarification, does my hon. Friend accept that nothing in new clause 1 would require the Government to accept irreversibly a particular method for calculating emissions now, and that the purpose of new clause 1 is simply to advance the process of international negotiations? He fully accepts that this is a complex matter and that the current method that the UK uses may not be the one that is finally agreed.

Phil Woolas: New clause 1 is sensibly drafted. By including both international aviation and shipping emissions in the targets and budgets under the Bill from 1 January 2013, if I have read it correctly, the Secretary of State would have to
“have regard to international carbon reporting practice.”
Later on, clause 86 defines the reporting method that I have mentioned. As I say, the Secretary of State would have to have regard to that carbon reporting practice or any other such EU or international agreements as may be specified. So I take my hon. Friend’s point, which that is why it is a more difficult argument for me to put.
Let me finish my argument, if I may. My hon. Friend’s second question was why have a date five years after Royal Assent that falls in the second budget period? I am very keen to emphasise that the Government amendment requires us to include emissions or to report to Parliament within five years, not at the end of five years—we could take a decision earlier. Why have we chosen that phraseology? The answer is that the Lords suggested that date and that framework and we are seeking to work within their amendment. In other words, I am trying to be consensual and once again I am learning that that is not always the easiest policy to pursue.
The hon. Member for Bexhill and Battle asked whether we should use a multiplier for aviation emissions. As I have said, the key point is that there are considerable scientific uncertainties about this issue. The Environmental Audit Committee looked at this issue as part of its scrutiny of the draft Bill and it concluded—I hope that my hon. Friend the Member for Stoke-on-Trent, North will back me on this—that we should not go down that road. In case it is needed, my hon. Friend has a copy of the EAC report in front of her. Therefore, we intend to follow the international practice of not having the multiplier.
The EAC concluded that, due to the significant uncertainties in this area, which are widely accepted by commentators, we should use the internationally agreed methodologies in this area. They do not include any radiative forcing index or multiplier in that regard.
I was specifically asked by the hon. Member for Vale of York about road and rail on the point that was made about the channel tunnel. Of course, there are already clear international rules on how to allocate road and rail emissions to countries, but there is no such international agreement in relation to international air or sea travel.
Let me quote Lord Taylor of Holbeach, the Conservative spokesperson in the other place, who said during the debate on this issue, in this case in relation to shipping:
“If the regulations on shipping are not sophisticated enough...it might prove economical to have goods driven across much larger stretches of land and then simply loaded on to ferries to make the Channel crossing, when a large ship could have delivered the goods to England with a fraction of the carbon footprint.”—[Official Report, House of Lords, 4 March 2008; Vol. 699, c. 1015.]
That was the point that the hon. Member for Bexhill and Battle made, and that is exactly the type of risk that I am talking about. In the case of aviation, we would also need to be clear on how a UK system would fit with aviation’s inclusion in the ETS, which we expect to start in 2012.

Gregory Barker: That is the very reason why we should have the broader definition of aviation and transport that we have suggested.

Phil Woolas: That was not the conclusion that Lord Taylor of Holbeach came to in the other place. I see the argument, but I believe that there would be a perverse incentive for that.
Let me finish my point on aviation; I think that the hon. Member for Bexhill and Battle will accept the logic of my argument. Once the ETS rules are agreed—and I expect they will be—we will ask our Committee on Climate Change for detailed advice on whether there is a methodology that works and that is compatible with both the EU ETS rules and the wider international context. We will also ask what the impact of adopting that methodology would be. We expect to be in a position to take a decision on whether to include international aviation emissions in our targets ahead of the start of the second budget period in 2013.
My argument is that there is strong agreement—the United Kingdom has pushed this point—to include aviation and shipping. We base our whole policy in the international arena on the idea of cap and trade and that means one has to base emissions on science—on actual emissions, not on some political fix. Our policy and the political pain that I acknowledge that we are going through on this point—I am the recipient of many thousands of communications on this matter—is not based on our desire to avoid the inclusion of aviation and shipping simply because we wish to exempt those sectors. We take our position because we wish to ensure that aviation and shipping are included in a practical, pragmatic way that can include those sectors, that leaves open better possibilities for international agreement and that is fair to the other sectors within our economy. In an appeal to my hon. Friend the Member for Stoke-on-Trent, North, I could mention ceramics, but I could equally appeal to Southampton, Felixstowe or elsewhere. We need to act pragmatically, and I urge the Committee to support that policy.

Question put, That the amendment be made:—

The Committee divided: Ayes 11, Noes 8.

Question accordingly agreed to.

Clause 15, as amended, ordered to stand part of the Bill.

Clause 16

Powers to carry amounts from one budgetary period to another

Gregory Barker: I beg to move amendment No. 52, in clause 16, page 8, line 44, leave out ‘1%’ and insert ‘0.5%’.
This is a probing amendment. We propose to reduce the amount of carbon units that can be carried back from one budgetary period to the preceding budgetary period—the latter period would be reduced so the previous period could be increased. We propose to reduce the amount that we are allowed to borrow from the future from 1 per cent. to 0.5 per cent. Although we appreciate that external factors, such as the weather, might make this so-called banking and borrowing useful to a degree, we want to ensure that the budgets are robust and not pliable, especially under political pressure.
We are also concerned that too generous a carry-back period might allow any Government of the day to hide their failure to meet the budgets and allow them to pass the buck on to the next Administration. The issue of banking and borrowing is worth probing further, particularly in the light of our earlier discussion about indicative annual ranges. There is a clear link between the width of any indicative annual range and the corresponding width in the banking and borrowing between budgetary periods.
I have already argued that the indicative annual range must not be too broad. I understand that the 1 per cent. banking and borrowing provision under clause 16 only affects the five-year budgetary period. However, we still need further clarity on their relationship. For example, how would banked reductions at the end of a five-year budget affect the next year’s annual range? Would the Government be allowed to count their banked reductions towards meeting the first year’s annual range, or would they have to spread them out over the entire period? Conversely, if a budget period began with 1 per cent. already borrowed from it, would all the annual ranges for that period be adjusted to reflect that?
Spreading out the effect of banked or borrowed reductions across the entirety of the next budget seems to make sense. It might not be possible to recoup the entire borrowed 1 per cent. within the first year of the next budget. Similarly, it would not be appropriate to use banked reductions to make it seem like the annual range for the first year had been achieved when in fact the Government were relying on the success of the previous five-year period—much like the way in which the current Government rely on the success of the previous Administration to achieve their Kyoto target. My right hon. Friend the Member for Suffolk, Coastal played a heroic part in that success.
If the carry-back provision was narrower, that sort of thing would not cause the same problems in the calculations of indicative annual ranges.

John Gummer: Has my hon. Friend heard any argument other than the weather for all this? The British have a tendency to blame the weather for everything. The truth is that if we consider climate change, the weather should have a less adverse effect than previously. Will he ask the Government whether the weather has become the universal explanation for not tightening this up more effectively?

Gregory Barker: Once again, my right hon. Friend has put his finger on it. I have not heard of any meaningful explanation other than the weather of why these indicative ranges would have to be changed so materially. Although there may be more violent weather events, we expect the weather to become milder and less severe in our part of the world. Perhaps the Minister can enlighten us.
It is vital to know what a Secretary of State can count towards a given target or range of targets. I am sure that the Minister can clarify the relationship between banking and borrowing and indicative annual ranges, and I would appreciate a detailed explanation. I do not move this amendment to undermine the evident benefits of having a banking and borrowing system, because I fully accept that that is a sensible thing for any Government to have in reserve. I know that the necessity for such a facility is already reflected in the Kyoto protocol, and for some existing national level cap-and-trade schemes, such as the US acid rain scheme, which is mentioned in the Stern report. I also appreciate the importance of banking and borrowing with regard to the carbon price and the cost of mitigation, and I understand the importance of having a carry-back facility in case of adverse weather or other unforeseen circumstances. Notwithstanding those issues, I wish to probe the Minister for more detail about the relationship between the breadth of the indicative annual ranges and the similar breadth of the carry-back facility.

Steve Webb: I wish to make a brief comment on amendment No. 52 in anticipation of a separate clause stand part debate.
The amendment, which is identical to one tabled in the other place, would replace one arbitrary figure with another arbitrary figure, albeit one that is smaller. It would be interesting to know from the Minister the thinking behind 1 per cent. and whether it is anything more than something along the lines of saying, “It’s not very much, is it?”, which is how I think the figure was derived.
As for the magnitude of the figure, it is a percentage of the five-year aggregate carbon budget. That means that it is bigger than it looks because 1 per cent. of the five-year total is equivalent to 5 per cent. of one year’s total—[Interruption.] It took me years to work that one out. This is important. It sounds innocuous, but in the context of 80 per cent. cuts over 50 years, with 1 or 2 per cent. as a typical annual figure, the amount under this provision could be 5 per cent. of the annual figure, which is large.
As I shall explain in the stand part debate, I object to the principle of borrowing. However, if we have to do that, we need the figure to be justified, and we should certainly err on the side of a much smaller figure, given that, in effect, it is five times as big as it looks. If all we can have is a smaller figure, I would rather have that and I would support the amendment, but I prefer not to have the principle at all.

Phil Woolas: I thought that the amendment was one of the cleverest that has been tabled because of the point made by the hon. Member for Northavon. The figure sounds small but, as in all such matters, the devil is in the detail. He is right that the amendment was discussed at some length both in Committee and on Report in the other place, and I refer members of the Committee to the Hansard record of those debates.
The accusation has been made that the figure of 1 per cent. has been plucked out of the air. Nothing is further from the truth. All the figures under the Bill are scientifically based and have been debated robustly. In case the hon. Gentleman mistakes my tone of voice, let me reassure him. Why do we consider that the 1 per cent. borrowing limit is appropriate? Our analysis suggested that allowing up to 1 per cent. of a future budget to be borrowed would be consistent with the rising emissions that might result during odd weather. The right hon. Member for Suffolk, Coastal reminded us of the importance of that to the British—I think that he referred to the English, but I am sure that he meant that it was the British predilection to discuss it. Furthermore, we must bear in mind the uncertainty of emissions data.
There have been three large emission rises due to unexpectedly cold winters since 1990, the coldest of which led to emissions in those years that were between 3 per cent. and 4 per cent. higher than in the year before. Translated into the clause, that means that if 0.8 per cent. of the subsequent budget was borrowed—4 per cent. divided by the five years of the budget period—the shock could be absorbed within a 1 per cent. limit on borrowing and the budget would still be met. That is my methodology. I agree that it is not rocket science, but it makes mathematical sense. It is symmetrical.
A more serious point is that those extremes of climate are, of course, expected to increase with climate change.
Mr. Gummerrose—

Phil Woolas: I knew that I should not have said that.

John Gummer: According to the Stern report and other reports, the problem is that we shall have a decrease in emissions as a result of cold weather and an increase in emissions as a result of hot weather because of less emissions due to heating and more emissions due to air conditioning.
Does the Minister accept that it would be rather good for the nation if it knew that it had to face the fact that the Government were going to stick to the targets? The nation would react much better if, rather than the Government’s saying, more or less, every time one of these things happened, “When it is particularly bad, we have this stuff in our back pocket that we can bring out”, they said, “We are not going to change this because we are stuck with targets that are fixed not because of our ability to meet them but because of the reality of the threat.” That is why I would be much happier with a smaller figure and a greater degree of straightforwardness from the Government.

Phil Woolas: I hesitate to argue this point on common sense because when Ministers or Front-Bench spokesmen start using that argument, it shows that they are on weak ground.

Steve Webb: Desperate.

Phil Woolas: Not desperate, but on weak ground. I counter with the opposite argument and say that the British public would not understand if we were not able to have that point of view. Again, we are not trying to wriggle out of this.
Let me complete my argument about the emissions data. All of us in the world of politics and Parliament talk about emissions data as if it were a pure measurement of geometry: it is not, I am afraid, although hopefully it will be in future. Provisional figures for emissions in the final year of the budget period will be available shortly after the period ends—such figures are generally accurate to within a few per cent.—but the final confirmed emission figures are not available until later. That is part of the frustration of the job. As the budget period would already have ended, if the emissions for the last year of the budget period were to be revised upward by the amount proposed, the Government’s options would be limited. The 1 per cent. limit is therefore considered the most appropriate approach to providing a small degree of flexibility because it meets the five-year point that the hon. Member for Northavon mentioned—I am talking about the end of the period, of course—without undermining the clarity and certainty that the budget system as a whole provides, which are crucial.
It is important for the United Kingdom and UK plc that we have ensured that a robust system of accountability is in place, in that the UK Government must seek and take into account the advice of the Committee on Climate Change and consult the devolved Administrations before using either the banking or borrowing powers in the clause. That will mean that any decision to bank or borrow emissions will be based on robust independent analysis. Further to that, analysis suggests that allowing up to 1 per cent. of a future budget to be borrowed would be consistent with the rise in emissions that might result from these two factors. We have followed the advice of the other place and provided a credible argument for 1 per cent. I confess that it is not scientific and can be challenged, as it has been.
I am grateful to the hon. Member for Bexhill and Battle for moving his amendment to question why that 1 per cent. figure was chosen, because he has rightly forced the Government to outline their methodology and rationale; that is the raison d’être of Committees. I am sure that the hon. Gentleman will hold me, or my successors, to account on this point.

Gregory Barker: I am grateful to the Minister for that explanation. I am certainly more informed. This is a probing amendment and I do not intend to press it to a Division. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Steve Webb: We have considered the specific number, but there is a wider principle about the banking and borrowing idea. Do we need this power at all? If there is a problem with hitting the carbon budget in any period, a facility is available to buy in credits, because this is the UK carbon account, not UK carbon emissions. Assuming that we do not get to 31 December at the end of the fifth year and suddenly think, “Ooh ‘eck, we’re in trouble”, and assuming that things will be very closely monitored by experts, scientists, forecasters, meteorologists and all manner of people, presumably it should not come as a total shock if we are on course to miss the target. If there is any prospect of missing the target, mechanisms other than those in the clause are available to deal with it—for example, we could buy in credits.
A facility for injecting savings into the current period appears unnecessary, therefore, but the opposite provision of pushing savings into the next period is, if anything, more worrying. It suggests that, if we do really well in the first period, we could give ourselves a few weeks off in the next five-year period. It is almost like working overtime and then having a vacation, which is fine in working life, but does not represent a sane or desirable carbon strategy. The clause will allow us to say, “Not only will we hit our targets, but we will have some slack and carbon savings to spare, so we will push a few into the next period, which means that we will not have to try so hard.”
Given everything that we discussed at the start of our proceedings—about this being a global challenge, of which the UK is a small point, and about how we need to do as much as we can—if we over-achieve, we should literally bank that and continue to be adventurous by maintaining the trajectory, but from a new starting point. We should not simply pat ourselves on the back and say, “We have done quite well. We consider ourselves to have achieved our goals already, even if we don’t do very well in the next five-year period, because it is already in the bank.” That is not the mindset with which we should approach this issue.
I would be very worried if we were skating so close to the upper limit of the five-year target that provisions would be necessary in case we breached it. After all, we are dealing with ranges, so I hope that we would aim to meet the targets comfortably, but fail-safe mechanisms are in place if it looks as though we are going to exceed them. On the other side of the coin, if we are over-performing and doing really well, which gives us breathing space, we should not just relax, but say, “That’s great. We’ve achieved good things, so let us press on from a new starting point, rather than have a few weeks, months or years off.” I cannot see any reason for clause 16 to stand part of the Bill.

John Gummer: I disagree with everything that was just said. If we are to run this thing sensibly, we should provide for the ability at either end to sort things out. As anyone who knows anything about writing books knows, before starting, one must say, for example, “I’ve got to write 10,000 words a day”. However, on completing those 10,000 words, it is a great mistake to do another 5,000, because the next 10,000 never get done the next day. It is necessary to keep to an organised system. There is a great deal to be said for tough targets run sensibly and a Government who stand by their word, but who have the necessary opportunity at the end of each of those otherwise artificial periods to carry over amounts.

Phil Woolas: I am worried about what book the right hon. Gentleman is writing and when it will be delivered. A draft copy for review would be dealt with in strictest confidence. I remind him that the incentives for early action and over-achievement are recognised by the Kyoto protocol, for the reasons that he gives.

John Gummer: We must be tough with ourselves and do this properly. Furthermore, we must not let ourselves down by being pusillanimous over the targets and carbon budget or get into the position of the iron maiden.

Phil Woolas: The right hon. Gentleman makes some very good arguments. In addition, I use the example of the evidence cited in the Stern review about the United States acid rain programme, which the right hon. Gentleman and others will recall. Allowing for banking between phases of that programme helped to deliver early reductions and improved participants’ efficiency. The evidence suggests that, because of the ability to bank from the first phase into the second phase, the emissions reduced in phase 1 were twice that required to meet the cap.
I take the arguments of the hon. Member for Northavon. They are slightly purist, but I do not criticise him for that. He is right to press the issue, but in practice it makes sense, from experience and from analysis, that we allow some give and take.

Question put, That the clause stand part of the Bill:—

The Committee divided: Ayes 17, Noes 2.

Question accordingly agreed to.

Clause 16 ordered to stand part of the Bill.

Clause 17 ordered to stand part of the Bill.

Clause 18

Duty to report on proposals and policies for compensating for budget excess

Martin Horwood: I beg to move amendment No. 35, in clause 18, page 10, line 6, at end insert
‘and any sanctions proposed against those responsible for budget excesses’.
What happens if we fail? Taken collectively, globally, the consequences are unthinkable. The cost of failure is famine, poverty, disease and death on an unprecedented scale. However, what happens specifically if we, the British political class, fail to meet the objectives being discussed in the Bill? I am saying “we” because I am not assuming that the Labour Government will still be around in 2012-13. It could be any of us, any combination of us or any of our successors who are in government at the time.
At the moment, the great sanction present in the Bill is a report on proposals and policies. In a sense, that is appropriate. If the budget target is missed, action must be taken. It is a greater threat—but only just—than the letter that has to be written by the Governor of the Bank of England on behalf of the Monetary Policy Committee to the Chancellor for exceeding the inflation target. I suspect that, as more and more inflation targets are missed and more and more letters are written, familiarity might even breed contempt for that sanction as well. I can see the Treasury quaking in its boots at the receipt of another letter. Likewise, I do not see Parliament shaken to its foundations by the need to produce a report. Yet in most cases when Governments break the law, which in a sense is what we are talking about when the targets are missed, some consequences normally follow.
There have been various suggestions as to what those sanctions might be. In another place, Lord Teverson suggested that the Secretary of State might one day be dragged away to the Tower of London because the targets had not been met. I do not think that he spoke in all seriousness but, given the consequences of failure, we must think seriously about what should happen to Secretaries of State who preside over the missing of such targets. We as the British Parliament could think collectively about a financial penalty—the Treasury could buy the carbon credits, perhaps at a premium, to make up for the lost target. However, that rather undermines the arguments about trying to minimise the proportion of targets met by purchasing credits, rather than by a genuine domestic effort to decarbonise the economy. If, at some stage, the Treasury could be persuaded to say that that was an affordable route, the sanction would clearly have been counter-productive, as it would have encouraged the Government to think about buying their way out of the problem.
We tried to table an amendment that would have caused an automatic reduction in Cabinet salaries equivalent to the excess by which the target had been missed. I thought that it was an exciting amendment; it would have led to an interesting debate that could have extended into the general area of performance-related pay for Ministers and Governments. Sadly, it was ruled out of order on the grounds that there are, apparently, already existing processes for setting Cabinet salaries, and this was not one of them.

Michael Weir: I sense a slight problem with the amendment. Under the clause, a report must be laid before Parliament. Subsection (2) refers to
“proposals and policies of the Scottish Ministers, the Welsh Ministers or a Northern Ireland department, it must be prepared for consultation with that authority.”
Does the hon. Gentleman propose that the UK Parliament takes powers to impose financial penalties on the devolved Administrations? That might be a step too far for the powers of this Parliament.

Martin Horwood: I would hesitate to suggest any such thing, not simply because I am afraid of the hon. Gentleman, but because I am afraid of some of my Scottish colleagues. However, on careful reading, I think that we are amending only subsection (1), so I am not sure that the criticism is correct. However, it is an important matter and I take the hon. Gentleman’s point.
Having had those slightly more exciting and interesting options ruled out, we are left with the less exciting amendment No. 35, which opens the debate about what sanctions, if any, will be proposed against those responsible for budget excesses. I hope that the tabling of the amendment starts to stimulate that debate both inside and outside Parliament. I have often drawn an analogy between the challenge and threat that we as a society face now with that faced in war time. In that sense, it is carbon criminals, rather than war criminals, who we seek to hold to account. Given the consequences of failure, it is important that we address this matter and that the Government and the official Opposition give us their perceptions of what sanctions will apply that will really incentivise the meeting of targets in a serious way.

Gregory Barker: Amendment No. 35 opens a new chapter in the story and direction of the Bill. It proposes that the Secretary of State report to Parliament on the reasons why, and solutions for, having exceeded a budgetary limit. The report should include a list of
“sanctions against those responsible for budget excesses.”
We cannot support the amendment for a number of reasons. First, it goes against what I like to call the opportunity agenda around climate change. My party likes to make both business and the public realise that, in the climate challenge, there also lies an enormous economic opportunity and the chance to live more fulfilling lives. We believe in the power of “can do”, not the dour politics of “cannot” that the Liberal Democrats are so fond of.
The Bill currently sets a long-term framework and clear road map within which business can work with confidence towards developing new technologies, growing new markets and processing the challenge of decarbonising our economy. The vehicle for getting there can be found in policies outside the Bill. My party has announced incentives such as feed-in tariffs for microgeneration, an emissions performance standard for electricity that is generated in the UK and a new green exchange market to kick-start investment in our low-carbon economy. There is plenty more where that came from, but the place to legislate for such policies is not in the Bill, which should remain a lean, focused framework document.
To include a list of sanctions on any group that breaches its budget, as the Liberal Democrats propose in the amendment, is beyond the remit of the Bill. Who would decide those sanctions—the Secretary of State or the Committee on Climate Change? Under which legislation would they be empowered to lay those sanctions? Presumably, the sanctions would take the shape of either a monetary fine or additional legislation.

John Gummer: Is not this a manifestation of the Praise-God Barebones approach to life, in which the only way to solve these problems is to be thoroughly miserable and to punish people who get it wrong? Surely, we ought to be doing exactly the opposite, which is to be thoroughly cheerful about the fact that we are going to get through and win, and to encourage people who do things right. Those people should profit rather than have to wear hair shirts of the liberal variety.

Gregory Barker: By hair shirts of the liberal variety, I presume that my right hon. Friend means short-sleeved hair shirts. He is absolutely right. The Conservatives are passionately wedded to adopting a can-do, hopeful and optimistic agenda.
Existing market mechanisms, such as the EU ETS and the carbon reduction commitment programme, should have sufficient sanctions if the targets are not met. If they do not, those mechanisms should be tightened, rather than additional costs and regulations being placed on business. We can be sure that any final increase in cost will be passed on to consumers, and the law of unintended consequences should be considered. Policy makers should remain acutely aware of that at this time of increased energy costs and heightened energy poverty. In the interests of optimism and ambition—
Steve Webbrose—

Gregory Barker: I cannot say, “In the interests of optimism and ambition, I give way,” but perhaps we could have a semi-colon before “I give way.”

Steve Webb: I heard the hon. Gentleman’s semi-colon.
Is he saying that we should lay all those duties on the Government and Secretaries of State and that, if they fail to achieve them, so what?

Gregory Barker: Let me restate that the Bill is not the place for harsh penalties. The message that we, as legislators, must send out to the public, the electorate and the wider world is that we are focused on finding solutions and funding a road map to a sustainable low-carbon economy. We have an inherent belief in that mission, and we do not believe that we should start things by clobbering people with fines, regulations and tokenistic measures for taking the pay of Ministers. The agenda is much bigger than that.

Martin Horwood: I am listening with interest to this hug-a-hoodie approach to Ministers who break the law. Does not the Conservative party believe in there being consequences for Ministers who break the law?

Gregory Barker: Talking about carbon criminals and Government Ministers breaking the law takes the debate in a thoroughly different direction. We have to get back to common sense, which is to rely on Ministers and the good judgment of the British electorate to elect a Government—in future—who will be good to their word and who will provide an ambitious route forward, rather than relying on silly mechanisms in the Bill. For those reasons, I cannot support the amendment.

Michael Weir: I did not intend to speak to the amendment, but I have been spurred into action by some of the remarks made by the hon. Member for Cheltenham. His response to my intervention was quite wrong. In the few years left in which Scotland will be part of the UK, we will be part of a net UK carbon budget, which covers all parts of the UK, and the report will be on the UK carbon budget. I am sure that Scottish Ministers will well exceed their part of things, but if one of the devolved Administrations did not do so, under his amendment, the UK Parliament would fine or act against Ministers over whom they have no authority because they are part of a devolved Administration. There has been a good bit of party political knockabout between the other two parties, but the amendment is inept and would introduce something that would only cause division and confusion. I oppose the amendment.

Phil Woolas: I am sorry to intervene in this tremendous disagreement between the opposition parties. I want to put on record something that we believe is important in relation to the clause and amendment No. 35. We are discussing a serious requirement on the Secretary of State to lay a report before Parliament setting out proposals and policies to compensate for the excess emissions if a budget were not met. The Secretary of State must lay that report before Parliament, because clause 5 will establish that responsibility.
Our view of the amendment and its relationship with clause 5 is that, given the statutory basis of the targets and budgets in the Bill, any failure to meet a target or budget carries the risk for the Government of judicial review, like most legal duties on the Government. In such a case, the remedy would be at the discretion of the court. In most circumstances when a Government have failed to comply with a duty, courts do no more than issue a declaration, but we cannot rule out completely the possibility of a court making a more stringent order, such as ordering them to purchase credit. No Government would take that risk lightly.

Sitting suspended for Divisions in the House.

On resuming—

Phil Woolas: I was drawing my remarks on amendment No. 35 to a close. I want to add that schedule 2 provides powers to establish trading schemes and that includes, of course, provisions for penalties. In that case, for example, within the context of the new carbon reduction commitment, we are looking to develop a compliance regime that provides a transparent and proportionate deterrent against non-compliance.
The sanctions relate to the level of the individual trading scheme or policy, and that is because they are tied to the obligations that fall upon the individual participants in the scheme. In the same way, the framework of sanctions set out in clause 18 falls upon the Secretary of State, because that is where the obligations are placed. I hope that those reassurances about the transparency of the provisions will allow the amendment to be withdrawn.

Martin Horwood: The Minister has made some serious criticisms of the amendment. He says that there is a risk of judicial review, and that therefore sanctions will be imposed at the discretion of the courts. That is an extraordinary admission in respect of a Bill of this seriousness. We are saying that we will leave whatever sanctions emerge against Governments, specific Ministers or Secretaries of State to unelected judges and that we will refrain from ever specifying sanctions in the Bill or in any legislation that comes before the House. That does not seem to be very democratic.
The Minister suggests that one of the possible sanctions might involve forcing the purchase of credits and that that might be imposed by the courts. That is one of the scenarios that I described in my opening remarks. As I said, it runs the risk—especially if it is not done at a premium but simply involves buying more credits outside the planned regime—of allowing the Government to buy their way out of a situation, with all the problems around domestic effort and purchasing of credits that we will probably discuss later this evening.
Finally, the Minister said that if we take the model of things such as the carbon reduction commitment, there will be sanctions for certain sections of the economy. In a sense, he is saying that participants in such schemes—in other words, business—will face severe sanctions but politicians will not. That is not a very positive signal for this Parliament to send out.
Most of the Conservative criticisms of the amendment seem to relate to our dress sense, with references to dour, short-sleeved Liberal hair shirts. I seem to remember similar criticisms coming from the Conservatives in the 1980s and 1990s, when we were accused of being sandal-wearing bearded hippies, but those were the days when the Conservative party thought that carbon reduction meant closing down coal mines. We were ahead of our time then, and we are ahead of our time now.
In the light of political reality and some genuine criticisms from the hon. Member for Angus, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Martin Horwood: I beg to move amendment No. 34, in clause 18, page 10, line 10, at end add—
‘(4) The Secretary of State shall certify that the Committee on Climate Change agrees the factual content of any report laid in accordance with this section.’.
My comments will be reasonably brief. We propose the amendment because distrust has been expressed in Committee, mainly of the Daily Mail and The Guardian, but also of potential successors to this Minister and other Ministers. At some level, we share some of that distrust. We see the need for some gold-plating in parts of the Bill, and this is one of them.
The amendment would ensure that when action plans and reports were presented to Parliament as the means to remedy the excess over the carbon reduction targets in the budget, they were not simply a strategy or a report as described by the hon. Member for Bexhill and Battle, but were rigorously based on sound science and analysis. For that reason, the amendment would ensure that the Committee on Climate Change had agreed the factual content of any such report and that its authority was attached to the assumptions underlying it.

Gregory Barker: In the interests of balance and fairness, I assure the Liberals that we are happy to support the amendment on the grounds that it would enhance the authority of the Committee on Climate Change and improve the transparency of Government reporting on proposals and policies for meeting future budgets.
The report provided for in the clause will outline what proposals the Government would bring forward in the event of an excess of emissions in a given budget period, and it will be issued as a result of Government failure. Transparency and accountability are key themes of the Bill and it is important that we improve it in that direction wherever possible, so I am happy to lend my support to this measure.

Phil Woolas: One word comes to mind—shocking. It is shocking that the allegation should be made that the committee would be required to check the factual content of a ministerial report. On a serious point, people have asked what is the statutory enforcement of the Bill. One thing that the Bill does is put in statute the relationship between the civil service and Ministers regarding advice. It will be illegal for civil servants to advise Ministers contrary to the Bill. That is an important point, although it may not be seen by the outside world.
Let me give some reassurances to counter what I see as the undue scepticism—not cynicism—of the hon. Member for Cheltenham. Under the clause, the Government proposals will be a statement of fact to the extent that they will represent facts about what the Government intend to do. The report will be a statement of the policies that the Government intend to implement, so it does not seem entirely logical that an independent committee should be called on to verify the factual content of the report.
More importantly, it is crucial that the committee should remain completely independent from the Government—that is a debate that we have had before. It is Parliament that will hold the Government to account for the progress that we are making towards our 2050 target and it is important that I emphasise that. That is why, although I understand the intent in relation to subsection (3), requiring that the Secretary of State’s report be sent to the authorities listed, I cannot envisage circumstances where the report will not be based on fact. If it were to be so, Parliament would hold us to account through due process.

Martin Horwood: The Minister has perhaps an unduly optimistic view of the integrity of all Government proceedings, but perhaps that is reassuring in someone who is serving as a Minister. There is a need for the amendment, but in the light of the hour and the lack of support for it on the Government side, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 18 ordered to stand part of the Bill.

Clauses 19 to 22 ordered to stand part of the Bill.

Clause 23

Targeted greenhouse gases

Martin Horwood: I beg to move amendment No. 75, in clause 23, page 12, line 15, after ‘dioxide’, insert—
‘( ) methane (CH4),
( ) nitrous oxide (N2O),
( ) hydrofluorocarbons (HFCs),
( ) perfluorocarbons (PFCs),
( ) sulphur hexafluoride (SF6).’.
This is an important amendment and one that is, in its way, just as important on a similar set of principles as the inclusion of aviation and shipping that the Government have already conceded. It has been subject to a substantial campaign outside Parliament from people who are concerned that the plans and policies we adopt in this place are representative of a genuine and comprehensive effort to tackle climate change. It is pretty difficult to see how that can be done by legislating for only one greenhouse gas—carbon dioxide.
Various arguments have been put against the inclusion in the Bill of the other greenhouse gases that make up the Kyoto basket of greenhouse gases. It has been said that carbon dioxide is the most important gas and that, in any case, it represents 85 per cent. of greenhouse gas emissions. That is certainly true. It is obviously important that we focus a large part of our effort on carbon dioxide, but there are other potent greenhouse gases. The short-term impact of methane—CH4—is much more serious than that of carbon dioxide. It captures heat 20 times more efficiently than carbon dioxide, so, in its way, it is a much more potent gas, even though it is present in the atmosphere in a less persistent way.
In the same way in which aviation and shipping should not be allowed to escape the provisions of the Bill, we need to ensure that greenhouse gases such as methane are tackled. Otherwise, we could be in the ludicrous situation in which if the other greenhouse gases that only represent 15 per cent. of emissions now are allowed to proliferate and we make huge efforts to reduce carbon dioxide, the percentage of other greenhouse gases might rise on a much faster scale. We could end up with 20, 30 or 40 per cent. of our emissions coming from those remaining greenhouse gases, if they are allowed to increase.
In Committee in the other place, Lord Rooker argued:
“We have a good understanding of the costs and benefits of reducing CO2 emissions, whereas there is much less understanding about the cost-effective potential of reducing other greenhouse gas emissions, particularly in the long-term.”—[Official Report, House of Lords, 8 January 2008; Vol. 697, c. 841.]
In one sense, that is an argument against us participating in the Kyoto protocol, which, of course, demands that we accurately measure and account for the whole basket of greenhouse gas emissions. If we were to include other greenhouse gases in the Bill, it would be a good incentive for developing better measurement systems for the other greenhouse gases. Perhaps we have been lax in developing a better understanding of those other greenhouse gases.
Our understanding is not quite as bad as Lord Rooker suggests. The National Audit Office’s report, “UK greenhouse gas emissions: measurement and reporting”, goes into some detail about the methodology used to look at the whole basket of greenhouse gases. It talks about the intergovernmental panel on climate change guidelines on greenhouse gases, which specify in detail what methodologies to use for calculating emissions, and how trade-offs between precision, accuracy and resources should be approached. The report states that emissions should be estimated
“using a bottom up approach. Using the economic activity data supplied by government departments, trade associations and businesses, AEA and sector specialists the Centre for Ecology and Hydrology (CEH) and the Institute of Grassland and Environmental Research (IGER) model emissions of all known anthropogenic sources of greenhouse gases in the UK within the following five specific source sectors: energy, industrial processes, agriculture, land use, land use change and forestry, waste.”
It goes on to state:
“These broad areas are then broken down into activity types, subtypes, and activities. The emission-producing activities include the combustion of fuels such as coal in power stations, the use of petrol and diesel in road transport, industrial processes such as cement manufacture, agricultural sources such as enteric fermentation in cattle, and sources and sinks of CO2 caused from changes in the way land is used.”
In case hon. Members are in any doubt about the meaning of enteric fermentation, I can tell them, courtesy of Wikipedia, that it means fermentation within the digestive systems of ruminant cattle. I am trying to avoid using any unparliamentary language, but I was interested to discover that most of that fermentation is belched rather than emitted in any other way. Half of Australian methane emissions are created in that way, which has been a serious incentive to the Australian Government to support research into the vaccination of cattle to try to reduce flatulence—[Laughter.] Although that is making hon. Members laugh and smile, that is a serious result of Australia measuring and recognising the seriousness of reducing methane emissions. I understand that other research on that is under way in Japan and Germany.
Finally, there is the possible excuse that the Government are following the recommendation of the joint scrutiny Committee, which was divided over the issue of other greenhouse gases and said:
“Expanding the Bill in this way might therefore jeopardise its coherence and the extent of support which it might command.”
Just in case the Government are inclined to quote that Committee in support of their position, I shall cite some of its other conclusions:
“We agree with the Government on balance that it is reasonable for the Bill to focus on reducing emissions of carbon dioxide, and we therefore accept its overall architecture. However, this in no way relieves the Government of its responsibility to continue to reduce other greenhouse gases”.
It is difficult to see how we are going to follow that instruction with no policy tools at our disposal that even look at those other greenhouse gases.
The amendment is, in its way, as important as the measures on reducing aviation and shipping emissions. The logic for the Government’s acceptance that we cannot exclude any large section of the economy from greenhouse gas measurement and reduction policies applies just as much to the other greenhouse gases.

Gregory Barker: I have much sympathy with the spirit of the amendment, about which the hon. Member for Cheltenham spoke fluently. It would be foolish to consider the science of heat-trapping gas emissions on a global scale without taking due consideration of the full basket of greenhouses gases. It is well known that, as the hon. Gentleman said, methane has 22 times the heat-trapping potency of carbon dioxide. It is less well known, although it causes considerably more concern to learn, that nitrous oxide is 310 times more powerful than carbon dioxide as a heat-trapping gas. Any agreement that moves to deal with greenhouse gases globally must therefore include the full basket of the six major gases. However, we should remind ourselves that the Bill legislates for only the UK, as the Government were at great pains to remind us during the discussion over their principal aim.
The evidence presented in the DEFRA report on national statistics in relation to UK greenhouse gases shows that carbon dioxide, standing at 85 per cent. in 2006, accounts for the vast majority of UK emissions. Importantly, the remaining 15 per cent. of emissions, which comprise the more potent greenhouse gases, are, I am pleased to say, in steady decline in this country, whereas the UK’s carbon dioxide emissions have risen substantially since 1997. That is why the primary focus of the legislation should, at least for the time being, be on reducing carbon dioxide emissions.
To back up my argument with some figures, UK emissions in 1997 were 548.1 million tonnes CO2 and, in 2006, they were 554.5 million tonnes CO2. That is an increase of 6.4 million tonnes. DEFRA statistics show that UK CO2 emissions have risen in five of the past 10 years. The UK will meet its Kyoto reduction targets only because of the dash for gas under the last Conservative Administration, which resulted in a reduction of the UK’s CO2 emissions from more than 590 million tonnes in 1991 to a low of 540 million tonnes in 1999.
In March 2006, the Government dropped their manifesto commitment, which was repeated in three successive manifestos, to cut carbon emissions by 20 per cent. by 2010. The 2010 target was set independently by the Royal Commission on Environmental Pollution. It was replaced in 2006 by the climate change programme review, which pledged to cut emissions by 15 per cent. by 2010. Despite Labour’s three manifesto promises to slash emissions by 20 per cent., carbon emissions have clearly risen since 1997. In 2006, CO2 emissions fell by just 0.1 per cent. The Bill must focus on reducing carbon dioxide emissions.
Allow me to contrast the figures on carbon with our national emissions of other greenhouse gases. According to DEFRA, in 2006, methane accounted for 7.5 per cent. of the UK’s emissions, but that was a reduction of 53 per cent. below 1990 levels. In 2006, the main source of methane emissions were landfill sites and agriculture, but emissions from landfill and agriculture have reduced by 61 per cent. and 13 per cent. respectively since 1990. Again, according to DEFRA, emissions of nitrous oxide, which is a particularly nasty gas, fell, thankfully, by 40 per cent. between 1990 and 2006, with a year-on-year reduction from 2005-06 of 3.7 per cent. If only we could repeat that level of performance on carbon dioxide we would be in a far better position to meet our 2050 targets in good time.
Given the drop in emissions of the basket of greenhouse gases and, by contrast, our poor national record of reducing CO2, which constitutes 85 per cent. of our emissions, the focus of the Bill should remain on carbon dioxide only. We might find that emissions of other greenhouse gases rise in future. Fortunately, there is sufficient flexibility in the Bill to allow the Secretary of State to redefine the scope of the Bill when and if it is seen to be fit to include the other heat-trapping gases.
We should remain mindful of the challenges ahead in reducing our carbon dioxide emissions. The Government’s willingness to build a new and unabated coal-burning power station at Kingsnorth springs to mind. That power station alone would emit more than 7 million tonnes of CO2 into our atmosphere if the emissions were not captured and stored from some point in the future.
I note that the Government’s consultation on the definition of “carbon capture ready” was discreetly announced last night. We should bear in mind the implications of that definition as we debate that further in this Bill.

Phil Woolas: I was expecting a debate about science on this sensible amendment; I am now drawn into politics. My reaction to the comments by the hon. Member for Bexhill and Battle is “double shocking”.
A number of allegations have been made. Let me address the content of the amendment, rather than my party’s manifestos. There are very strong arguments indeed for including the other greenhouse gases in the Bill’s targets and budgets, particularly scientific arguments, which are, of course, the strongest. Also, including those gases would ensure consistency with the international approach. The European and international approach is for targets that cover all greenhouse gases rather than just CO2 and we recognise that our current targets are not consistent with that approach. Therefore, we said in the other place—I repeat it here—that we will include other greenhouse gases in our targets if that is what the committee advises; I suspect that it will do so.
There is a very important point that I ask the hon. Member for Bexhill and Battle to consider. In including the other greenhouse gases, one must, of course, have strategies for reducing them. While we concentrate on the CO2 element, on which there are strategies and policies in place and there is expectation of progress in the future, that is not necessarily the case for all the other greenhouse gases. That is not a reason for not including them, though.

Gregory Barker: Surely the Minister will accept that a reduction in CO2-equivalent emissions of methane or one of the other greenhouse gases has exactly the same impact in terms of global warming as a reduction in CO2? Therefore, the priority must surely be to develop those reduction strategies.

Phil Woolas: Indeed. I agree with the hon. Gentleman that that point is important and is often missed from the debate. We tend to interchange “CO2” with “greenhouse gases” in the public debate, as if they were the same thing.
We genuinely seek advice from the committee on the scope to reduce the other greenhouse gas emissions. The hon. Member for Cheltenham used some examples of emissions from agriculture. However, it is not obvious what the scope to reduce them is.

Anne McIntosh: When I listed the other greenhouse gases that could fall within the definition, I understood the Minister to be saying that he was minded to introduce them at a later stage and that the Government had not excluded their introduction, but were not doing so at this stage. Is that correct?

Phil Woolas: We are minded to include them, we want to include them, and we want the advice of the committee as to what the scope for reducing them is. We want to include them for two reasons. The first is the science, as the hon. Member for Cheltenham has said, and the second is international compatibility. It is important that we do include them for those reasons.
I want to challenge the arguments about the figures made by the hon. Member for Bexhill and Battle. He claimed that the United Kingdom’s progress against its Kyoto target was a result “entirely”—if he did not say “entirely”, at least “substantially”—of the dash to gas. That is not fair. There have been a huge number of energy-efficient measures in the country that have contributed towards a decline in the emissions: the climate change levy; the climate change agreements, and the Carbon Trust in the business sector and the energy efficiency commitment in the household sector, which are independently audited, as are the measurements of emissions. In the energy supply sector, the introduction of competitive markets in production and supply has driven a large reduction in the UK greenhouse gas emissions since the early 1990s. Further savings in CO2 per unit of energy have come from the renewables obligation from higher diesel penetration in the transport fleet and from the European emissions trading scheme.
If the Government were cynical, we would simply accept the amendment on the basis that we could show that the total basket of non-CO2 gases has fallen by 38 per cent. since 1997. That would be a “stick it in your pipe and smoke it” piece of propaganda on behalf of the Government, but because we have integrity, we will not fall into that trap, although it would be easy for me to do so. The figures on the reduction in emissions show that the UK has made significant progress against the 1990 and 1997 baselines.
Since 1990, UK emissions of all greenhouse gases were 18 per cent. below the baseline year. For CO2 only, UK emissions were 8 per cent. below the baseline year. Therefore, the provisional UK emission figures for 2007 were 1 per cent. lower than in 1997 for CO2, and 9 per cent. lower for all greenhouse gases. Taking emissions trading into account, the most recent figures were 5 per cent. lower and 12 per cent. lower for all greenhouse gases. That shows that economic growth can be decoupled from a growth in emissions. That is far from the picture that the hon. Member for Bexhill and Battle mischievously tried to piggyback on to the back of the genuine and improving amendment tabled by the hon. Member for Cheltenham. I ask for the amendment to be withdrawn.

Martin Horwood: I am grateful to the Minister for his comments. He made some serious criticisms of the amendment, including the one that we should not attempt to introduce too many policy measures relating to greenhouse gases for which there is limited or uncertain scope for reduction. Sadly, if that is true, we are all in trouble. If reductions to 15 per cent. of our greenhouse gas emissions are not going to be attempted or are going to be outside the scope of policy, we are in deep trouble, especially as that percentage is set to rise dramatically if carbon reductions are achieved. If I tell the Minister that significant efforts are being made in other countries to reduce such emissions, he might take the matter more seriously. I mentioned Japan in my opening remarks. According to the team from Obihiro university of agriculture and veterinary medicine, a few simple food additives costing about 50p each day per cow might be able to remove virtually all methane from a herd’s daily output of greenhouse-gas enriched belches. Given that there are something like 1.5 billion cows on the planet, that would provide significant scope for reduction in methane emissions. In the same way that renewable energy can be stimulated by feed-in tariffs and other policy measures, energy efficiency can be stimulated by policy measures, and carbon trading stimulates business and industry to reduce its carbon footprint. There is political business potential to reduce methane and other greenhouse gas emissions, but we need the policy tools. We need the policy framework in place to achieve that, and that is why we support this amendment. However, I acknowledge that if we do not have the support that I had hoped for from Conservative Members, it is unlikely that the amendment will be agreed to. On those grounds, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 23 ordered to stand part of the Bill.

Clause 24 ordered to stand part of the Bill.

Clause 25

UK domestic effort

David Maclean: I beg to move amendment No. 83, in clause 25, page 13, line 22, at end add—
‘(3) In this section “sinks” mean land-based carbon sinks which have been assessed by the Committee on Climate Change as being, or likely to be permanent.’.

Frank Cook: With this it will be convenient to discuss the following: Clause stand part.
Government new clause 2—Duty to have regard to need for UK domestic action on climate change.

David Maclean: Where I am coming from is my belief that carbon sinks have a vital role to play in the United Kingdom, and certainly internationally. This is not the point at which we should talk about the vital role that carbon sinks can play in the rain forest, but I hope that the Government will encourage companies to invest heavily in them. However, in the United Kingdom, too, there is a great role for carbon sinks in our forests, peat lands and bogs. I do not want them discredited because of some inappropriate carbon-sink trading that might be going on, or some inappropriate or dodgy dealing that does not stack up.
As I read about carbon sinks, discovering the wonderful role that our forests and peat lands could perform, I came across more and more stuff on the internet from environmental groups that had been rubbishing carbon sinks on the basis that the schemes could be a bit dodgy or the solution was not permanent. The groups suggested that if the world warms up, our forests in this country could get warmer and that rather than our peat bogs and carbon sinks retaining carbon, they could be releasing it, so let us not touch them. Some of the criticism had a rather puritanical and misguided streak, saying, “Yes, carbon sinks may be good, but they do not cause enough pain, and what we really ought to be doing in the United Kingdom is making sure that we are closing down industry and making people and businesses suffer, so let us not pay attention to the trees and the forests and the land that we have and let us not exploit it to the full.” That is barking. If we are to be successful in meeting our climate change targets and are to do genuine good, yes, we must have targets for industry to reduce the amount of carbon emissions and for the rest of us to drive less or to have a cleaner or lower carbon lifestyle. However, for goodness’ sake, let us exploit some of the things that we have in this country and expand them.
Carbon dioxide emissions from soils totalled 13.69 million tonnes in 2005. By comparison, carbon dioxide emissions from domestic aviation were 2.47 million tonnes. There used to be an old gardener on the television years ago—was he a Yorkshire gardener?—who said, “The answer lies in the soil.” The answer in some part does lie in the soil. If we maintain it and keep it properly, we will be locking carbon in for evermore. All the peat lands in England and Wales would absorb around 41,000 tonnes of carbon a year if they were kept in a pristine condition. However, they could emit up to 381,000 tonnes of carbon a year if they were damaged by practices such as excessive burning, drainage and overgrazing. The restoration and enhancement of peat lands could save 400,000 tonnes a year, which is the equivalent to the greenhouse gas emissions from 1.1 billion car miles or 84,000 family-sized cars. In addition to that, not only do we lock in the carbon, but we would safeguard the habitats of 5,000 different species of plants and animals.
I am sure, Mr. Cook, that it will be at the forefront of your mind that Natural England held a conference headlined “Better Bogs Create Carbon Sinks”. The “better bogs” conference, which was officially entitled “Moors for the Future”, in the Peak district, said:
“We must protect and enhance our upland peat bogs—they are the UK’s most important and vulnerable carbon store.”
That was the message from Natural England. Sir Martin Doughty, the chair of Natural England, said:
“Evidence shows that the degradation of soils through over-grazing, fires, drainage and erosion is releasing five times more carbon dioxide into the atmosphere every year than from all domestic flights in the UK.”
Peat soils contain a huge amount of carbon. If it is locked in, it is okay, but if there is degradation and the peat land is not looked after properly, it becomes a major source of emissions.
I see the Minister nodding—I have rabbited on about so many different things that he was bound to have nodded at something. If the Government accept the analysis that our carbon sinks are legitimate and good, and that we ought to enhance them, I do not want anyone rubbishing them in the next few years and deterring businesses from investing in them. I am happy to have businesses in my constituency that might be emitting carbon doing a carbon-trading deal and investing in peat bogs, new forest—or woodlands—and in trees that, hopefully, will not catch fire accidentally or be cut down. We must distinguish between that sort of forestry and planting trees for 20 or 30 years that might soak up carbon while they are growing, but which are then cut down regularly. That is not what I have in mind.
The only way in which we can make the approach completely legitimate and stop some of the misguided environmental groups from attacking our carbon sinks and the planting of trees is to make sure that the Committee on Climate Change has the role of approving carbon sinks. It is no good me or anyone else coming along and saying, “I am just going to have a carbon sink there. I am investing in this and buying a bit of hillside, which has good grouse shooting and a lot of peat. I am therefore doing my bit as a carbon sink, so can I please have that accredited against me?”
If we are to have legitimate and kosher carbon sinks, the Committee on Climate Change should accredit them or have an assessment system for saying, “Yes, this is a good carbon sink and, as far as we can say, it has the possibility of remaining permanent, so Natural England and others can put conditions on it to make sure that the peat is not eroded and not dug up, drained and released.” We want a legitimate verification system that keeps our carbon sinks as a valuable resource for reducing carbon and locking it in, and that does not allow people to discredit the whole concept.
I conclude with those words because I am worried that some people want to discredit the concept of carbon sinks for their own ends. Yes, the UK should be doing a lot. Yes, our industry should be producing less carbon, but let us not rubbish carbon sinks as a natural and perfectly acceptable form of locking in carbon that should be expanded and increased, and that should not only help British industry, but contribute to the world’s reduction of carbon in the atmosphere.

Anne McIntosh: I congratulate my right hon. Friend on speaking to the amendment so eloquently and with such knowledge. I wish to restrict my remarks to clause stand part and Government new clause 2. I place on record how firmly we are wedded to the wording and the principle of clause 25. In my humble view, it goes to the heart of what the Government and all of us want to achieve in support of a climate change strategy. Our aim is obviously not only to come forward with a Bill that is groundbreaking in its own way, but to create a low-carbon economy. By being one of the first movers in that regard, it is important to aim primarily at reducing pollution in this country, and not to export the problem through the use of more than 30 per cent. of credits, but to reduce emissions and, for want of a better term, to reduce pollution in this country.
There are few more important clauses than clause 25. It puts the responsibility firmly on the Secretary of State to ensure that at least 70 per cent. of the effort undertaken to reduce emissions to meet our carbon budget is achieved domestically. The original Bill—indeed, this is the case for the Bill without the clause—would have contained no such clarity. I pay tribute to Conservative Members of the other place who eventually won the argument for including clause 25 in the Bill, with the help of Liberal Democrat peers, which was much appreciated. The Conservative party considers that the removal of the clause would seriously weaken the Bill.
We have received strong support for keeping clause 25 in the Bill in a joint statement from the WWF-UK, Scottish and Southern Energy, Christian Aid and the Royal Society for the Protection of Birds. In their briefing, they go right to the heart of the matter when they say:
“Removing clause 25 from the Bill would undermine a key objective of the Bill—that of establishing a framework which provides UK companies with the long-term certainty that they need to incentivise sustainable and low carbon investments. It would also leave unanswered the question—to what extent will the UK rely on buying credits or emission allowances from other countries to meet its targets? Without a requirement for clear and strong domestic action, the UK could in theory meet its targets under the Bill without any action to decarbonise the UK economy—an outcome that would do little to promote UK leadership in the international climate negotiations.”
If one accepts that the point of the Bill is, as has been said, to provide the market and companies operating within it with the long-term clarity and certainty that they need to compete and be the best in the world, the clause should be retained.
The clause says that the Secretary of State must ensure that at least 70 per cent. of the efforts undertaken are achieved by
“domestic emissions reductions and domestic removal by sinks.”
It goes on to define “effort” as
“the difference between the present UK carbon budget and the verified emissions for the previous budgetary period.”
Having compared the clause with new clause 2, I humbly submit—I hope that the Minister will respond positively to this plea—that the wording completely misses the point of seeking to obtain the highest reduction. Clause 25 writes into the Bill a provision in relation to 70 per cent. of domestic action and will thereby reduce pollution at home; it will not just export the problem. That will still leave a 30 per cent. allowance for international credits and will fit and be compatible with the EU ETS.
I commend clause 25 to the Committee and make a plea to the Minister to keep it in the Bill. Perhaps he will also withdraw new clause 2.

Steve Webb: I agree with the hon. Lady that the clause is fundamental, and I would like to address the clause stand part issue. In my short contribution, I shall address some misunderstandings or myths that have surrounded the debate, which we heard on Second Reading.
The first such myth, which is often quoted, is that a tonne of carbon is a tonne of carbon, and that it is of no great consequence, as far as the planet is concerned, where it is saved, as it will have the same adverse effect wherever it goes up. It is interesting that the person whom the Government have asked to supervise the process, Lord Turner, does not take that view. In discussions in another place he has said that
“it is not absolutely the case that a tonne of carbon saved in every country of the world is precisely the same. There is a value in hard emission reductions targets in developed countries because they will drive the changes in behaviour, energy efficiency and technology which will then be required across the whole world.”—[Official Report, House of Lords, 11 March 2008; Vol. 699, c. 1412.]
So the argument that it is all the same whether we do it ourselves or buy it in is not accepted by Lord Turner. Given that he has been charged with advising the Government, it seems a shame to pre-empt what he will say by taking out some sort of assumption about the importance of domestic effort.
There are two conflicting arguments, one of which is that we just want to save the stuff. The other says that there is a leadership role both from the point of view of British industry, as Conservative Members have said, and—I hesitate to use the “M” word at this point—from a moral dimension. That moral dimension says that because, to a greater or lesser extent, we caused the problem, we have a responsibility to make the first moves in clearing it up. That means that we should play our part and make the adjustments sooner.
If we accept the long-term goal, whether that is described as a zero-carbon Britain or a low-carbon economy, the sooner we get on with it the better. Clause 25 allows us to put off the evil day—or it might be a good day, depending on how we look at it—by getting savings elsewhere. Our argument for retaining clause 25 is that there is a strong case on moral, practical and even self-interested grounds for doing far more of this ourselves than might otherwise be the case.
The second principal argument used against any restriction of the sort contained in clause 25 is that it messes up emissions trading. The point about emissions trading is that it is an elegant, market-based solution and people will get the cheapest savings possible. People who find it hard to make emissions savings do not have to spend huge amounts of money as they can pay somebody who finds it easy to make those savings and the aggregate costs are minimised.
As an economist, I can see the attraction of that, but the working of the European emissions trading scheme means that there is no conflict between having some sort of cap on the extent to which we can opt out of domestic effort and the ETS. That is because the ETS is operated at an individual business location level. In other words, Governments agree a national allocation and that is subdivided between individual operators in the market. Once that has been done, businesses either meet their carbon emissions cap or they under-emit and sell their credits or over-emit and buy them in. That is true whatever we do in Committee this afternoon. It does not matter whether it involves 100, 0, 30 or 70 credits and so on. Whatever it is, businesses still have their caps and permits and they still buy and sell credits.
Nothing in the Bill will change the duties of businesses to comply with their emissions caps, so the existence of a cap and an emissions trading scheme has no bearing on that—it is totally unaffected by clause 25. On Second Reading, at least one Minister said that we should not do this as it would interfere with emissions trading, but it has no bearing on that whatever.
If we delete clause 25, there could be wholesale import, export and crediting schemes and so on. However, we would get a perverse result. Half our national emissions are covered by the emissions trading scheme. That means that the total of emissions from that source is given. Therefore, if every credit that we buy in is a saving on the national account and anything that we sell is a debit, there is no benefit from Government policies that incentivise industries within the scope of the ETS to cut their emissions, as that has no impact on the national carbon account.
For example, within the scope of the ETS, the Government have a policy that might get a particular industry to reduce its carbon emissions, which is great, but the cap has already been fixed, so it comes in under the total, the business sells its surplus credits abroad and that comes through on the national carbon account. We already know what the figure will be for that half of the economy.
A worse problem is that the half of the economy with the cap and trade will probably reduce its carbon emissions more slowly than we want to be consistent with the rest of the Bill. Because that section of the economy is fixed because 100 per cent. trading is allowed, the other half of the economy potentially has to do a lot more of the legwork, and that is inefficient. It is the opposite of the flexibility that the Minister talked about—it creates artificial divisions between the half of the economy that is in the ETS and the other half that is not. Government activity to incentivise business within the ETS to do better on carbon is a waste of time from the point of view of targets. If the Government want to hit their targets, they must do far more with the other half of the economy, and that is profoundly distorting.
Cutting the story short, there is no incompatibility between clause 25 and emissions trading, which does not undermine or affect it in any way. Deleting clause 25 would mean that everything that that half the economy did was already predetermined in terms of the national carbon account, so the other half would have to make most of the effort, which seems wrong.
Fundamentally, there is a strong, self-interested case for national leadership, as well as a strong moral one, of the sort embodied in clause 25. If the Minister wants to return with a different number, we would be happy to debate it—he could say that our 30 per cent. is as arbitrary as his 1 per cent. It is a case of more so than not: 70 per cent. represents more domestic effort than not, but we could have a sensible debate about the figures.
Although new clause 2 is a token nod in the right direction, just “having regard to” the merits of domestic effort does not really do the job, so I hope that the Committee will resist new clause 2 and retain clause 25.

Nick Hurd: We on the Joint Committee on the Draft Climate Change Bill spent much time on this issue, because as previous speakers have said it is incredibly important. Our conclusions will have significant economic consequences for British taxpayers and shareholders in British companies.
I know that the Minister understands all the arguments involved, and new clause 2 is wholly inadequate—it does not mean anything and sends a dangerous signal to British businesses that we want now to commit to the long-term investment decisions that will make the difference. In that context, they would need to receive a strong signal about the commitment to reduce domestic emissions. We must not just buy our way out of the problem in international markets.
We do not only want British companies to reduce carbon emissions—this is not just a carbon issue—but, as my hon. Friend the Member for Vale of York said from the Front Bench, we want British companies and institutes to get ahead in the journey towards a low-carbon economy, because that is in our long-term economic interests.
The Minister has spoken about striking a balance, and he knows, as does everybody who has considered the issue, that important relevant tensions and currents run against each other: on the one hand, the responsibility of any Government and Parliament to ensure that our route to reducing carbon emissions is as cost-effective as possible—the same goes for anyone running a British company in terms of their responsibilities to shareholders —and, on the other, our moral responsibility to take a lead as a developed nation in reducing emissions and our long-term economic interests in being at the vanguard of a low-carbon economy. Those tensions must be reconciled.
With your indulgence, Mr. Cook, I wish to make a simple point about transparency. As has been said, the 70:30 figure is arbitrary. There is no science to it—to some degree, it has been plucked out of the air to generate debate and to make an important point, which is that we need to reach an agreement on where to strike this balance.
Up until now, the Government have not been transparent on that issue. In the Environmental Audit Committee, we tracked the progress of the 2010 carbon target. When that target was published, there was no mention of buying international credits. It was understood that it would be all about UK domestic emission reductions. It was only when the revised climate change programme was published in 2006 that the Government began to count the use of carbon credits purchased from abroad.
The Environmental Audit Committee was quite shocked by a review of the European emissions trading scheme. Our report states that
“without the expected contribution of Phase II of the EU ETS, UK carbon emissions in 2010 are projected to be only just over halfway to the 20% target, a very significant shortfall.”
There has been no transparency up until now about the degree to which we meet our international agreements through the purchase of international credits. That issue needs to be brought out of the darkness and into the light.
I do not know whether 70:30 is the right balance—I do not know whether the Minister even knows what the right balance is—but we need a transparent number, a limit and a threshold around which we can build a consensus. New clause 2 is too vague and will not do.

Tony Baldry: I think that every member of the Committee will have received a copy of the joint statement by the World Wide Fund for Nature, Scottish and Southern Energy, Christian Aid and the Royal Society for the Protection of Birds—an unusual combination bringing together development non-governmental organisations, wildlife NGOs and business. Two paragraphs from that statement are worth putting on the record:
“These organisations support the amendment as a necessary requirement to ensure that the UK becomes a low carbon economy and does not rely too heavily on carbon credits. A major benefit of the amendment is that it would bolster the UK’s leadership on climate change by ensuring significant reduction efforts are made at home. Financial flows to developing countries should come on top of these actions and not instead. Finally, the amendment would not conflict with the UK’s participation in the EU Emissions Trading Scheme.
The Government’s proposed replacement amendment (New Clause 2) that ‘the Secretary of State must have regard to the need for UK domestic action on climate change’ would provide next to no clarity or certainty on this issue. Indeed, in WWF’s opinion the amendment is almost meaningless in addressing the key issue of whether the UK sets itself on the path to becoming a low carbon economy and avoids locking itself into new high carbon and long-lived infrastructure.”
The Minister can ignore the Committee and he can ignore the House of Lords, but I caution him that it is not necessarily sensible to ignore the combined postcard-writing power of the WWF and the RSPB.

Phil Woolas: I ignore those organisations at my peril, and spend many late nights signing letters to hon. Members who have forwarded those postcards. I am grateful to people who write in.
May I deal with amendment No. 83 first? The debate has been important and perhaps the important points made by the right hon. Member for Penrith and The Border have been forgotten. He asked for an assurance that we take account of the carbon sinks in the United Kingdom. As the Member for Oldham, East and Saddleworth, I understand the point, because much of the measurement of moorland peat is done in my constituency, and I have been following that for some 10 years.
I can assure the right hon. Gentleman that the carbon sinks are included in the targets. The Bill relates to net UK emissions—emissions less removals by UK carbon sinks. That provides an important incentive to promote carbon sinks in the United Kingdom. Indeed, the Forestry Commission is one of the most successful organisations in the world at increasing forestation in percentage terms, but not in total acreage, and has responded to that very point. It relates to the subsequent debate about the balance between overseas and domestic emissions. The net emissions are there.
I can provide further reassurance. There are already well-established mechanisms in place to ensure that removals from sinks are properly assessed. Information must be compiled in accordance with the same systems and international methods as for the annual emissions inventory which the UK is already required to submit to the United Nations framework convention on climate change. The UK emissions inventory follows such guidance from the intergovernmental panel on climate change which is reviewed every year by the United Nations—that is, by international experts—to ensure that such practice is followed. We intend to follow exactly the same guidance in compiling the emissions statement, including information on removal by sinks under clause 15. In fact, clause 29(2) requires that the amount of UK emissions and UK removal of greenhouse gases must be determined consistently with international carbon reporting practice, which is defined subsequently in clause 86.
For those reasons, the right hon. Gentleman’s amendment is unnecessary, but I entirely agree that it backs up the point about basing our net emissions measurements on science and not on a political fix. It also, conveniently, helps me with my argument against subsequent speakers, and I shall explain why.
This is the heart of the debate and hon. Members on both sides made their arguments strongly and passionately. Let me try to explain the Government’s argument. We have discussed Government amendments to clause 14 on the balance between UK emissions, action within the EU, and international action. That was a key issue, as has been said, when the Bill was debated in the other place, and the Government have given it significant consideration since then. In the debates on the Bill there has sometimes seemed to be a mistaken idea that this Government, or a future Government, will do anything they can to buy their way out of reducing UK emissions, by purchasing international credits instead. However, we all recognise that the world as a whole will only tackle climate change if developed countries such as ours reduce their emissions significantly. That is why we have tabled new clause 2. If accepted, it will place into legislation for the first time the need for UK domestic action on climate change. The new clause is intended to set out plainly the belief of Government and, we hope, Parliament that we need to reduce our domestic emissions if we are going to meet our targets and encourage others to reduce their emissions as well.
However, we also must not lose sight of the reality that climate change is a global challenge. We need global emissions to halve by 2050, based on the 2 deg C increase that we talked about at clause 1. The international carbon market will be the key to achieving the scale of investment flows necessary to achieve that, which are estimated to be in the hundreds of billions of dollars, over and above the additional public money—additional to official development assistance—that is required. We need action at European Union and international level, as well as at domestic level, if the world is to tackle climate change. We do not believe that the policy outlined in clause 25 is the right one. Apart from the point that clause 25 is inflexible—I do not want to debate that as it is helpful to specify a figure—the 70:30 limit is arbitrary.

Anne McIntosh: The Minister will be familiar with the conclusions of the Environment, Food and Rural Affairs Committee. It positively recommended that the provision to allow for international credits should be strictly limited to a quantifiable amount, to be advised by the Committee on Climate Change for each budgetary period. What is absent from the new clause is the recognition that although we want to contribute, as my hon. Friend the Member for Ruislip-Northwood said, in the original budget for 2010 there was no mention of any part being allocated to international credits.

Phil Woolas: Indeed, we looked at the Select Committee report and other recommendations when considering the new clause and I hope that the hon. Lady expects an honest disagreement. Let me explain why there are problems with the idea of setting a fixed limit in the way in which clause 25 suggests. The UK’s policy in this regard is firmly rooted within a joint-European Union effort. That is one of the most successful, if not the most successful, area of European Union solidarity in terms of world leadership. As it stands, clause 25 fails to recognise the crucial role of action at the European Union level.
The hon. Member for Northavon made some important points about the construct of the ETS. If one looks at clause 25 in the context of the ETS, it creates an artificial distinction between domestic action and other action in the European context. That would create a significant risk of cutting across the ability of the United Kingdom’s companies to participate freely in the EU ETS. The EU ETS is a stepping stone to the ultimate prize—a global carbon market that sets an absolute cap on emissions. The rest of the world is not only watching the EU very carefully, but in some cases, including within the United States, is now following it. Under the EU ETS rules, it does not matter if UK companies reduce their own emissions or buy allowances from another EU country, where the same emissions reductions might be made more cheaply. However, under clause 25, emissions credits bought under ETS, even from another developed country such as Germany or France, would count as being overseas action and would be counted against the 30 per cent. limit or any other limit that we would set. That would create huge uncertainty and would risk increasing costs as well, as the Government have little or no control over the commercial decisions in the ETS.
Let me quote what Lord Turner of Ecchinswell said on this issue when he appeared before the Select Committee on Environment, Food and Rural Affairs, which the hon. Member for Vale of York mentioned:
“Of course, it is important within the European Emissions Trading Scheme to realise that we cannot actually in advance define the maximum amount of buy-in which will occur from the rest of Europe to the UK. That is not a policy variable which the UK Government or any other government”
within the EU—actually, he did not say “within the EU”, but that was the context—
“can pre-fix within the scheme. The amount of buy-in will be whatever the market determines and will only become clear as we move towards the end of a budget period.”
Yet clause 25 invites us to do the exact opposite, defining now, in 2008, what the maximum amount of credits will be, as bought in from within Europe and from the rest of the world, all the way to 2050 and beyond.
Let me further back up my argument by mentioning what Lord Taylor of Holbeach, the Opposition spokesman, said in the other place, when discussing the amendment:
“A fixed percentage in the Bill may not be the best way of going about that.
that is, addressing decarbonisation—
“We understand the difficulties in placing such a precise figure in the Bill, which range from the constraints of the international negotiation tables to the fact that the carbon market will look a lot different in 42 years.”—[Official Report, House of Lords11 March 2008; Vol. 699, c. 1407.]
There is a difficulty, first, in the context of the ETS.

Steve Webb: The Minister is answering the point thoughtfully and seriously, but he is saying essentially that the UK Government are indifferent about domestic emission cuts and that those bought in from, say, Germany—a country like ours—or Poland, or a much poorer country. However, our argument is that it is not a matter of indifference. Surely, there are strong arguments why the UK would want, as a positive policy goal, to favour domestic cuts, as even new clause 2 says. His argument that we should just be neutral within the ETS is inconsistent with his own new clause 2.

Phil Woolas: I have so far advanced the argument about the ETS. I have another argument that I wish to develop, which encompasses the hon. Gentleman’s point.
Of course, we recognise how important it is that the Bill demonstrates the need for domestic action to reduce UK emissions and—to address the point that the hon. Member for Ruislip-Northwood made—to ensure the maximum possible transparency about our plans for meeting targets and moving the UK to a low-carbon economy. That is why we have tabled Government amendment No. 8, which we have already discussed, and new clause 2, which we are debating now.
New clause 2 would place the Secretary of State under a legal duty to consider the need to reduce UK emissions of greenhouse gases when considering how to meet the targets and budgets. That important step forward represents a constructive response to the concerns expressed in Parliament. It will, if agreed to, set out unequivocally Parliament’s desire that the UK should move to a low-carbon economy. New clause 2 will mean that, when developing policies to meet carbon budgets, the Secretary of State must keep in mind the need to reduce UK emissions and the positive benefits in doing so, including improved energy efficiency, which will of course reduce energy bills; demonstrating our commitment to take action on climate change to international partners; helping to meet our international obligations; helping to meet other policy objectives, such as improving air quality; and addressing the advantages to UK competitiveness of developing the technologies and industries that can achieve low carbon. We agree that there needs to be a balance. It is up to developed countries to show the way.
The global low-carbon energy market is already worth $38 billion and employs 1.7 million people. Within the UK, the environmental goods and services market is likely to grow from £25 billion in 2005 to nearly double that by 2015. We believe that, taken together, the Government amendments will ensure that decisions on the appropriate balance between action at domestic, EU and international level are first, based on independent and expert advice from the Committee on Climate Change, secondly, transparent, thirdly, sufficiently flexible to take account of changes to the international context between now and 2050, and fourthly, guided by the need for UK domestic action on climate change.
The accusation is made or the implication is drawn that the United Kingdom Government want the policy to pay off our conscience—so we can pay someone else to reduce emissions. That is the proposition that is made; I will not use the word allegation. That allegation misses two fundamental points. [Interruption.] Sorry, I meant to say proposition. The hour is late, Mr. Cook and I, like you, am bored with my voice. The proposition misses two fundamental points. First, the United Kingdom’s CO2 emissions within our borders are 2 per cent., but the emissions from United Kingdom’s world economic activity are around 15 per cent. Our carbon footprint goes way beyond our shores. The mechanisms that we believe that we must have to address global emissions must take that point on board. The 15 per cent. carbon footprint is our goal, not just the 2 per cent. Of course the credibility of the clean development mechanism and the other mechanisms is crucial, but one should not confuse problems with the CDM with arguments against the need for offsetting.
Secondly, on the whole, developing countries in the G77 welcome and support this approach, because it provides them with a flow of finance in addition to overseas development aid that can help to ensure that their prosperity can grow through low-carbon technology. When one debates in the international forums on 30:70 or another figure, one hears a plea from the developing to the developed countries to allow maximum flexibility, so that the carbon markets can provide a flow of finance to develop economic prosperity in those countries. I ask colleagues to consider those two points when they make their decision.

Nick Hurd: No one disputes the value of the international capital flows that the Minister has described, but the debate is about finding a balance. I have listened to him carefully and I think that the record will show that in the previous debate he talked about the Government’s desire to have the flexibility to go up to 100 per cent. of international credits. Where is the reassurance about the transparency that I was seeking? Where in this process do the Government imagine we will have a transparent threshold for the deployment of international credits, or are they trying to avoid that completely?

Phil Woolas: I am grateful to the hon. Gentleman. He asks questions and follows the debates closely. The reassurance that he seeks is in the amendments that we have already tabled. Clause 35(2) requires the Committee on Climate Change to comment on action, and new clause 2, which the hon. Gentleman said was inadequate and not tough enough for him, places a new legal duty upon us, as I have described. I hope that the combination of those two factors, which the Government have considered since the debate in the other place, will be enough. We are in danger of throwing the baby out with the bathwater by not grasping the profound importance of placing our statutory, legally binding commitment within the international context of the EU and wider international agreements.

David Maclean: I shall be brief, as I anticipate that we may be voting shortly and we may all wish to have a little lull in proceedings. I am delighted that the Minister says that carbon sinks are included and that the UK believes passionately in maintaining and enhancing them. He explained that clause 29(2) states that our carbon policy must be determined
“with international carbon reporting practice”
in mind, and that clause 89 provides further definitions. I have checked them out and he is absolutely right. I did not read far enough ahead before I bashed down my amendment to clause 25.
I am content that my amendment is not necessary. Therefore, irrespective of what other colleagues may wish to do with their amendments, or of other votes that may or may not take place, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question put, That the clause stand part of the Bill:—

The Committee divided: Ayes 8, Noes 12.

Question accordingly negatived.

Clause 25 disagreed to.

Clauses26to 29 ordered to stand part of the Bill.

Steve Webb: On a point of order, Mr. Cook. I may be mistaken about the procedure, but we would like to amend Government amendment No. 7 with amendment (a), if that is possible.

Frank Cook: I am grateful for the interest of the hon. Member, but the skills of chairmanship will become very clear if he waits and has patience.

Clause 30

Emissions from international passenger travel or imports or exports of goods

Amendment proposed: No. 7, in clause 30, page 15, line 36, leave out subsections (1) to (5) and insert—
‘(1) Emissions of greenhouse gases from international aviation or international shipping do not count as emissions from sources in the United Kingdom for the purposes of this Part, except as provided by regulations made by the Secretary of State.
(2) The Secretary of State may by order define what is to be regarded for this purpose as international aviation or international shipping.
Any such order is subject to affirmative resolution procedure.
(3) The Secretary of State must, before the end of the period of five years beginning with the passing of this Act—
(a) make provision by regulations as to the circumstances in which, and the extent to which, emissions from international aviation or international shipping are to be regarded for the purposes of this Part as emissions from sources in the United Kingdom, or
(b) lay before Parliament a report explaining why regulations making such provision have not been made.
(4) The expiry of the period mentioned in subsection (3) does not affect the power of the Secretary of State to make regulations under this section.
(5) Regulations under this section—
(a) may make provision only in relation to emissions of a targeted greenhouse gas;
(b) may, in particular, provide for such emissions to be regarded as emissions from sources in the United Kingdom if they relate to the transport of passengers or goods to or from the United Kingdom.’.—[Mr. Woolas.]

Amendment proposed to amendment No. 7: (a), in line 13, leave out from ‘Kingdom’ to end of line 15.—[Martin Horwood.]

The Committee divided: Ayes 8, Noes 12.

Question accordingly negatived.

Amendment proposed to amendment No. 7: (b), in line 13, leave out from ‘Kingdom’ to end of line 17.—[Gregory Barker.]

The Committee divided: Ayes 8, Noes 12.

Question accordingly negatived.

Question, That amendment No. 7 be made,put and agreed to.

Clause 30, as amended, ordered to stand part of the Bill.

Clauses 31 and 32 ordered to stand part of the Bill.

Schedule 1 - None

Gregory Barker: I beg to move amendment No. 58, in schedule 1, page 44, line 5, at end insert—
‘not fewer than seven and not more than 12 members of which—’.

Frank Cook: With this, it will be convenient to discuss the following amendments: No. 59, in schedule 1, page 44, leave out lines 6 to 9 and insert—
‘(a) up to six must be nominated by the national authorities, and
(b) up to six must be nominated by the President for the time being of the Royal Society.’.
No. 60, in schedule 1, page 44, leave out lines 10 and 11 and insert—
‘(2) The Chairman must be appointed by the Secretary of State.’.
No. 61, in schedule 1, page 44, line 11, at end insert—
‘( ) The nominations made under paragraph 1 must be considered by a relevant select committee of the House of Commons and no person shall be appointed unless and until their nomination has been approved by such committee.’.
No. 62, in schedule 1, page 44, line 12, after ‘authorities’, insert
‘and the President of the Royal Society’.

Gregory Barker: I shall speak to amendments Nos. 58, 59 and 62, which would change the nomination procedures and composition of the Committee on Climate Change. The adjustments that we propose would make the committee more independent, more scientific and better equipped to deal with the new responsibilities that have been given to it.
As the Bill stands, the committee seems too small to cope with those extra duties. Amendment No. 58 would increase its membership to ensure that the additional burdens could be covered adequately. We believe that a membership of seven is not quite sufficient. It is important to ensure that the committee is able to give due attention to those matters as well as to nominate people with relevant experience. We therefore believe that it is important to allow the option to increase the committee to no fewer than seven members and no more than 12.
Amendment No. 59 relates to the nomination procedure. To ensure the independence of the committee, we believe that approximately half of the appointments should be made by the Royal Society. That would depoliticise the committee, so that we did not end with a group of people potentially beholden to Ministers, political parties or special interest groups. I expect that there might be some criticism—

Sitting suspended for Divisions in the House.

On resuming—

Gregory Barker: I am delighted to resume proceedings, Mr. Cook. As I was saying, the amendment is an effort to depoliticise the committee and not end up with a group of people who are potentially beholden to Ministers of the day, political parties or special interest groups. There might be some criticism that the Royal Society has its own internal politics. It has been mentioned in previous debates that the world of science is not one of monolithic agreement and unified opinion, but I hope that members of the Committee will agree with the intention behind the amendment.
There needs to be a mechanism to ensure that appropriate experts and scientists are appointed to the committee through a process that is apolitical, independent and credible. What assurance can the Minister give that that will be the case, even if he can explain that nominations and appointments will be carried out with the utmost care and contentiousness? We do not doubt the Government’s commitment to ensure that members of the committee are indeed appropriate, but we consider that there needs to be a provision under the Bill to ensure that that will continue to happen in future. What mechanisms are in place to ensure that, after the initial appointments, the committee will continue to be truly independent?
I am keen to move on to amendment No. 63, but amendments Nos. 59 to 62 are effectively probing amendments, so I shall confine my remarks.

Michael Weir: Amendment No. 60 would remove the devolved Administrations from any decision in respect of the appointment of the chair. Will the hon. Gentleman explain why he has tabled such an amendment?

Gregory Barker: No, I cannot—off the top of my head. If I were a Minister, I would promise to write to the hon. Gentleman. However, I am not, so I shall have a word with you outside in the corridor later.

Martin Horwood: It is delightful to be resuming our business, even at this slightly late hour. I congratulate all those Labour Members present on their stamina, although I warn them that Liberal Democrats will talk about climate change until Christmas if given half a chance. However, I shall try to be brief in the interests of everyone’s blood pressure.
We are happy to support amendments Nos. 58 and 61. Amendment No. 58 is wise. It would increase the potential for a diverse committee with a range of expertise, while amendment No. 61 quite rightly seems designed to reinforce Select Committee scrutiny. Amendment No. 59 and its derivative, amendment No. 62, would give an interesting role to a charitable body, the Royal Society, which also has within its charitable objects and strategies the remit to influence the Government’s policy, so in a sense it is a logical and appropriate body to be reflected in the Bill as a strong, independent voice.
The only slight worry is that the Royal Society might consider that its freedom of action to criticise the Government’s policy would be compromised by the arrangement. Nevertheless, the amendment is important. We suggested an alternative amendment, which has not been selected. It would have provided the SDC with an independent remit and expertise in a wide range of areas relating to sustainable development. It was an alternative for the Government to reflect on, if they considered that the Royal Society was inappropriate.
I am completely baffled by amendment No. 60, which seems designed to irritate the Scots and the Welsh and to re-impose of central UK authority by the Conservative party. However, since the hon. Member for Bexhill and Battle is as baffled by his own amendment as we are, I suggest that we do not spend further time on it.

David Maclean: In rising to support the amendments, I want to press the Minister to confirm that, among the membership under paragraph (3)(b) to schedule 1, those with expertise in climate change policy at national and international level and, in particular, the social aspects of such policy, will have a detailed knowledge of the impact on indigenous peoples in rain forest areas of the world. I also seek his assurance that any other experts in
“climate science, and other branches of environmental science”
will have expertise in biodiversity in particular, and also the rain forests.

Phil Woolas: I want to make a number of points about amendments Nos. 58, 59, 60, 61 and 62. First, my answer to the right hon. Member for Penrith and The Border, is yes. That point has been raised throughout the proceedings and on Second Reading by a number of hon. Members. My hon. Friend the Member for Northampton, North (Ms Keeble) has also raised the point and written to me about it, and I was able to give her the reassurances that she sought. Expertise is also included in the adaptation sub-committee.
The five amendments would increase the size of the Committee on Climate Change and remove the devolved Administrations’ input. To be fair to the hon. Gentleman, he said that they were probing amendments, so I will not tease him about forgetting the Scots—I will leave that for another occasion. They also aim to ensure that all nominations are considered and approved by a relevant Commons Select Committee. The practical effect of the amendments would be to create a larger committee than currently envisaged of between seven and 12 who have been approved or appointed by a Commons Select Committee. Half the committee would be nominated by national authorities, and half would be nominated by the President of the Royal Society. Amendment No. 60 specifically requires the chair to be appointed only by the Secretary of State, as opposed to national authorities collectively.
I recognise that the intention of the amendments is to create a larger and more scientific body and to bring further transparency and rigour to the process by giving Parliament a role. Let me reassure the hon. Gentleman about the method of appointment of the committee. The committee will be first of its kind. It will be a UK-wide body reflecting the nature of the devolution settlements. Identical amendments were discussed in the other place, and the Government’s view has not changed.
We think that between five and eight members plus the chair is a good size. The shadow chair agrees with that point of view, as he stated in his evidence to the EFRA Committee in March. It strikes the right balance between ensuring that the committee contains a good mix of relevant experience and making sure that the committee is focused and dynamic. Amendment No. 58 would increase the number of committee members to between seven and 12, which would be a mistake because the committee would be too large to be focused.

Gregory Barker: Is the Minister saying that the Cabinet is not focused? The Cabinet is twice that size. Maybe that accounts for recent developments.

Phil Woolas: God so loved the world that he sent his only son and not a committee. I believe that there is a balance, given the remit of work to be done. The Committee on Climate Change needs to have a focused agenda, particularly running through to the period of 1 December, which we have discussed. I am mindful of the size and shape of the committee. My noble Friend Lord Rooker gave a commitment in the other place that the Secretary of State and the chair would review the committee’s size during its first year of operation and increase it using the powers already in the Bill, if necessary. It would be a bit hasty if we were to increase the size significantly now.
I have mentioned the obvious about the devolved Administrations and the impact of amendment No. 60. To reassure the Committee that the committee’s appointments will be independent, the appointment processes will, of course, be conducted in accordance with the Nolan principles and monitored by the Office of the Commissioner for Public Appointments. That is to make sure that the committee is not formed of people who are beholden to Ministers, political parties or special interest groups. I hope that gives reassurance.
Amendments Nos. 59 and 62 change the operation of the appointments process so that the Royal Society is responsible for appointing half of the committee members. We are concerned that that would make the appointments process less transparent. Indeed, Lord Rees of Ludlow, a former president of the Royal Society, made his views clear when discussing the amendment. He said that it would not be reasonable to expect a body such as the Royal Society to appoint members. I assure the Committee that we consult the Royal Society on appointments related to scientific matters, which I have recently done with regard to the committee on radioactive processing.

David Maclean: I am sorry to interrupt the Minister. My point, which has just occurred to me, relates to a slightly different aspect of what he is discussing. The committee will consist of a chairman and a maximum of eight other people, yet paragraph 1(3) lists nine distinct disciplines on which an expert is needed—that is only one of each. When the Bill says “climate change” and “other branches of...science”, it can only be at most one person. Unless there are more than nine people on the committee, not all the disciplines and skills will be covered. Or am I utterly wrong?

Phil Woolas: No, the right hon. Gentleman is not utterly wrong. I remember asking that very question myself six months ago. I took advice and said that we should review the matter during the course of the year—I have already committed to that.
Let me reassure the right hon. Gentleman further. One of the first appointments to the committee, in its shadow form, was Lord Robert May, who is an expert ecologist. I believe that, through his appointment, we have demonstrated our commitment to ensure that the committee considers the impact of its recommendations on the natural environment. However, Lord May has other expertise. We have really got the best and brightest, as is evident through the chair, who has taken on board a number of skills, experience and expertise. I am confident that we have the stature and status of committee that we require.
However, the first job of the committee is to advise on the setting of budgets, so we will review its composition during the course of the year. I give the reassurance that all the appointments are within the correct procedures of the Office of the Commissioner for Public Appointments, which, I can assure you, Mr. Cook, are robust and prevent Ministers from interfering unduly while maintaining accountability to Parliament.

Gregory Barker: As I said at the outset, the amendments are probing. To a certain extent, I was reassured by the Minister’s comments about possible future flexibility on the size of the committee, because it seems to us, despite the evident expertise of the existing members, that the committee is nevertheless taking on a huge task. As my right hon. Friend the Member for Penrith and The Border has pointed out, extraordinary expertise will be called upon if the committee is to do its job properly. Likewise, in an ideal world, we would prefer a more independent appointment process, but at this stage we take the assurances of the Minister. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Gregory Barker: I beg to move amendment No. 63, in schedule 1, page 44, line 36, at end insert
‘and each term of office must be at least six years’.
The amendment proposes a statutory minimum on the term limit of members of the committee. There are a number of reasons for having a statutory minimum. As evidenced by the debate so far, there is support in the House for making the committee independent, scientific and apolitical. I hope that the Minister will appreciate my scepticism when this Government have stuffed so many commissions and quangos with members of their own party. A six-year commitment would mean not only that members outlast a Government, but that they are locked in for the long haul. It would be a shame to see a Government replacing members after a year or two because they did not like the advice that they were receiving.

Martin Horwood: Will the hon. Gentleman explain the meaning of the term “locked in”? If a member of the committee wanted to resign, as Lord Turner intends to do, would they be prevented from doing so?

Gregory Barker: No, a member would not be prevented from resigning, but they would be prevented from reappointing themselves if the term of their appointment were less than that which I propose. The impartiality of the experts is arguably the committee’s greatest source of authority, and a longer term would help to ensure that that is protected. Under the amendment, committee members would sit for longer than a budgetary period, guaranteeing that they would be on the committee when it makes at least one of the reports on the five-year budget periods. Given the number of reports that the committee will be responsible for preparing, continuity is certainly advantageous.
Although six years seems like a reasonable term limit, hon. Members will appreciate that the amendment was motivated by impartiality and continuity. Will the Minister explain what mechanisms are in place in the Bill to ensure that those two vital aspects of the Committee are respected?

David Maclean: I, too, support the amendment. Had I studied it more carefully, I would have suggested the slight refinement of making the limit between four and six years. It is important that members are on the committee for an average of about five years, not so that they can be locked in, but so that there is continuity. We do not want to lose all members after five or six years. In the case of national park appointments, if there are 14 people in a national park, their appointments do not all come up for renewal at once. Some are on a cycle of four years; some are on a cycle of five years; and some only three years, which is far too short. It would be best if we had assurances from the Minister that there will be a minimum term appointment of say four years with some being appointed for five and some for six with a rolling spread.

Phil Woolas: The amendment was discussed in the other place, so I am in danger of repetition. I will start by explaining for the record that the Government’s intention is that the first committee members should be appointed for a term of five years. For current committee members, the five years will include the time that they have spent working on the shadow body, which will meet the proposals in some respects. That is not stated in the Bill, because it is not normal practice to specify a term of office in primary legislation.
The amendment suggests a term of appointment of six years. I think that that is bit too long, and I will explain why. Public appointments are usually for terms of three years each. Whatever their duration, they are restricted under the Nolan principles and the Office of the Commissioner for Public Appointments rules to two terms. In total, that cannot exceed 10 years. While a five-year term allows the Government of the day to extend an appointment, assuming that the OCPA rules are met, a six-year appointment may not be doubled because of the duration limit.
As my noble Friend Lord Rooker said in the other place, the arrangements satisfy the points made by the amendment. The practical impact of a six-year limit would be to stop somebody from being reappointed for a second term, whatever the merits of their expertise and so on.

Gregory Barker: I thank the Minister for that explanation and I appreciate the points that he has made. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Gregory Barker: I beg to move amendment No. 64, in schedule 1, page 45, line 10, after ‘the’, insert ‘reasonable’.

Frank Cook: With this it will be convenient to discuss amendment No. 65, in schedule 1, page 45, line 10, leave out ‘otherwise’ and insert ‘physically or mentally’.

Gregory Barker: The amendments outline various instances that should prevent somebody from being a member of the Committee on Climate Change. Our intention is to clarify a few of the reasons why a member can be excluded. The amendments would add a few points that we hope will not find too much discord in the Committee. The purpose of the amendments is simply to make the Committee on Climate Change more robust by adding a few more situations that we feel should result in removal or exclusion.
The amendments are designed to clarify what is meant in the Bill by “otherwise unable or unfit” to serve on the committee. We suggest, first, the phrase “reasonable opinion” and, secondly, the phrase “physically or mentally unfit”. We hope that our intention of increasing the clarity of the provision is welcomed by hon. Members. The proposal would not only provide clarity, but tighten the scope of the removal process so that only those who were truly physically or mentally unfit were excluded, not those whom the national authorities merely deemed unfit to serve. We hope that the Minister will welcome this clarification.

Martin Horwood: I understand the spirit in which amendments Nos. 64 and 65 have been tabled. Perhaps the Conservative party is imagining nefarious goings on in which appointments are made for political reasons and there are then attempts to remove members from the committee for political reasons, so that if control of the national Government in Scotland changed from Scottish National party to Labour or even Liberal Democrat, political affiliations might be sought out and people might be removed at sudden notice.
I suspect that amendment No. 64 would be a sensible tightening of the wording, but I am puzzled by amendment No. 65 because there are other bases on which people might be unfit to serve on a committee of this stature other than being physically or mentally unfit. I appreciate that the amendment is perhaps designed to prevent people from being removed because their opinions are controversial. That would be an unfortunate move, but what if their scientific credibility had been compromised? What if they had been caught out indulging in plagiarism or their professional reputation had been compromised by particular revelations? Those might be unfortunate developments that we would not like to happen, but the wording in amendment No. 65 is much too prescriptive.

Phil Woolas: Again, these amendments were discussed in the other place and consideration was given to them by their lordships. The circumstances in which the national authorities may remove a member are set out in the four sub-paragraphs of paragraph 5 of schedule 1. I want to highlight the fact that this is a standard power in relation to many non-departmental public bodies, which this committee is. We expect that it would be exercised only in exceptional circumstances, but it is important to make certain that the committee can carry out its duties appropriately.
Under amendment No. 64, the national authorities, when forming an opinion of whether a member of the committee was unfit or unable to carry out their duties, would have to reach an opinion that was “reasonable”. The amendment is unnecessary, as their lordships accepted, because the duty for national authorities to act reasonably and, in this case, to form a reasonable opinion is already in place under the well-established general principles of public law, including within the procedures identified in the Nolan report for public appointments. That is therefore already implicit in the schedule, so I see no reason to add it.

Martin Horwood: If there was a change of Administration at national level, would the removal of a member of the committee for political reasons be considered reasonable under the legal terms that the Minister is talking about?

Phil Woolas: I have just given the reason why we think that it is unnecessary to add the provision. We think that it would be detrimental to add it precisely because of the hon. Gentleman’s point. Let me give a brief explanation. Amendment No. 65 would reduce the scope of the words “unable or unfit” by specifying that members may be removed by national authorities only if they are “physically or mentally” unable or unfit to carry out their duties. Paragraph 5(d) is an important provision that allows the national authorities to remove or exclude a member in a number of very limited circumstances. It is important not to tighten the scope for the removal processes, for obvious reasons. The words “unable or unfit” may cover certain circumstances that impact on a member’s ability to do the job, such as serious illness that prevents attendance at meetings, or it could cover other situations, such as a conflict of interest that was not a problem when the member was originally appointed to the committee. There might be other unforeseen circumstances. It is a standard provision that ensures that the committee can function properly, and that members who cannot fulfil their duties appropriately for whatever reason can be removed. However, I stress that the power is to be exercised only in limited circumstances. It is not a power for the national authorities to use to remove a member without just cause or reasonable consideration. That is outlined in well-established public laws on such matters. We believe that following the well-established procedures and laws will achieve the right balance between what the amendment seeks and what there is a desire to protect against.

Gregory Barker: I listened to the Minister with interest and have I taken on board what was said by the hon. Member for Cheltenham. In light of our discussions, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Gregory Barker: I beg to move amendment No. 66, in schedule 1, page 45, line 34, leave out from ‘executive’ to end of line 35.
As the Bill stands, the appointment of the chief executive by the committee is subject to the approval of the national authorities. We consider that intervention by the national authorities in the make-up of the committee is undesirable. The role of the chief executive is important. The committee should be left to decide the appointment, but although it can choose the chief executive, the appointment must be approved by the national authorities. Will the Minister explain the necessity for political approval regarding a scientific committee from Whitehall or the devolved Administrations? We have said that the committee should be genuinely independent. Having such an approval process will diminish that independence.
Our motivation for having an independent committee is two-fold. Not only will it ensure that the committee can make its decisions without regard to political expediency, but it will ensure that the committee does not appear to be making decisions that could be interpreted—or misinterpreted—as political manoeuvres. That second reason alone should be enough to remove the provision for national authority approval. It should not appear that the choice was made in such a way that it could be considered to be a political appointment. The choice should be made resoundingly on the merits of the person’s ability to fulfil that important job.

Phil Woolas: Again, I have some sympathy with the amendment. However, I shall explain how far we have moved, and I hope to persuade the hon. Gentleman not to press it to a Division.
To ensure the committee’s independence, we have from the outset given it the power to appoint its own staff. It is a non-departmental public body. The committee must appoint a chief executive, and it may also appoint other employees. I have some sympathy with the intentions behind the amendment, which would further strengthen the independence of the committee.
Indeed, having listened to the recommendations made during pre-legislative scrutiny, we amended the draft Bill to confirm that the committee will appoint all chief executives. Previously, provisions allowed the national authorities to appoint the first chief executive. However, having listened to the views of others, we do not consider it appropriate to remove completely the requirement for the committee’s chosen candidate to be approved by the national authorities, as proposed in the amendment.
That was the view also of the Joint Committee. When it considered the draft Bill last summer, it decided that the committee should appoint the chief executive, but that the national authorities should approve the appointment. The Secretary of State is ultimately accountable to Parliament. It is taxpayers’ money, and Parliament has the right to hold the Secretary of State to account. The chief executive will also be the accounting officer of the Committee on Climate Change. That is a crucial part of the role, just as it is for a permanent secretary in a Department. It is important that the Secretary of State should be confident that the person selected by the committee is suitable.
We have considered the matter, moved towards the point of view proposed in the hon. Gentleman’s amendment, and gained the Joint Committee’s support for the position that we have arrived at. We think that it strikes the right balance between independence and accountability while allowing the committee to appoint its own chief executive.

Gregory Barker: I thank the Minister. I appreciate that he has moved some degree towards our position. We think that independence of appointment is of the utmost importance, but in light of the fact that he is coming towards our position and of the importance that we place on consensus where possible, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.
Further consideration adjourned.—[Siobhain McDonough.]

Adjourned accordingly at twenty-six minutes past Nine o’clock till Thursday 3 July at Nine o’clock.